Category: IMF – Russia

Source: IMF – News in Russian

May 19, 2025

Good afternoon,

Thank you, Karel, for the introduction and CEPS for hosting this event. I would also like to extend a warm thank you to Cinzia and Maarten for taking time out of your busy schedules, and to all of you for joining us today.

Europe has achieved much over the last 75 years.

The “economic miracle” of the post-WWII period brought the rapid recovery in income levels. The “Great Moderation” (1980s-2000) following the oil crises in the 1970s offered stable growth at declining inflation rates. And advances in regional integration—for example through the Single European Act in 1986–and global trade helped lift productivity and income levels in Europe. The result was income per capita in advanced European countries growing by two and a half times between 1960 and the end of the century, on par with the US.

Europe has shown grit when it mattered. Resolute policymaking helped overcome the double blow of the Global Financial Crisis and the European debt crisis. And Europe stepped up again during the Covid-19 pandemic and the energy crisis following Russia’s invasion of Ukraine.

But more work needs to be done.

The world is changing fast. Today, we are confronted with a more shock-prone, uncertain, and fragmented world. This adds to a series of domestic challenges in Europe. Some are longstanding: The great European project remains unfinished, the population is aging, climate change requires attention, and there is a worrying productivity gap with the most dynamic economies. Other challenges have become prominent only more recently, such as the need to bolster national and energy security. And, in many countries, there is limited fiscal space to meet these growing challenges.

Europe must once again step up if it wants to preserve its prosperity. Kicking the can down the road will soon make it impossible to fulfill commitments to social welfare, climate action, and national defense. Delivering on these fronts is existential—Europe’s economic and social model is at stake.

The deteriorating external environment weighs on Europe’s economic outlook.

In our latest World Economic Outlook, we project global growth to reach only 2.8 percent this year, in part due to ongoing trade and policy uncertainty. In the United States, growth is expected to slow to 1.8 percent from heightened tariffs, economic uncertainty, and softer demand, while China’s growth forecast is lowered to 4 percent. These numbers do not reflect the latest developments, which could mean lower tariffs than assumed in April. But uncertainty remains extraordinarily high and holds back consumption and investment.

And trade and policy uncertainty also led us to downgrade growth in Europe despite some offsetting factors: Germany plans to ramp-up infrastructure spending and European defense spending is projected to increase significantly.

• For the euro area, we expect growth at 0.8 and 1.2 percent in 2025 and 2026, a reduction of 0.2 percentage points in both years since our January projection. Growth in the more trade-exposed CESEE region slows by even more, reaching 2.4 in 2025 and 2.7 in 2026, a downgrade of 0.6 and 0.4 percentage points, respectively.
• High frequency indicators and euro area GDP flash estimates (excluding volatile figures for Ireland) in the first quarter of the year are consistent with our projections.

Inflation is decelerating and approaching targets, driven by lower energy prices and tepid demand.

There are notable risks around the baseline.

First, an escalation of trade tensions would further weaken external demand and increase uncertainty.

Second, a reconfiguration of supply chains could impact activity and inflation. In our view, trade diversion to Europe from countries more affected by US tariffs is a small risk on aggregate. But it could lead to losses in export shares for specific sectors in some countries, especially those CESEE countries with persistent real wage growth.

A third risk is a delay in the necessary fiscal consolidation, which could reignite concerns about repayment capacity.

So, how can Europe rise to these challenges and secure its prosperity?

Europe needs an ambitious and concerted push to advance long-stalled reforms to boost growth and economic resilience.

Action should be carried out both at the EU level to deepen the single market, and domestically to make product and labor markets more growth friendly.

The forthcoming EU budget for 2028-2034 should support and incentivize the reform push and meet the growing need for European public goods.

This reform effort must be anchored in a steady macro-policy response and open trade policies.

Let me look at some of the details.

Starting with macroeconomic policy…

…central banks should continue to normalize monetary policy while remaining focused on durably reaching price stability targets. The ECB should lower its policy rate to 2 percent this summer and maintain it there, barring major shocks. In CESEE countries, where inflation is still higher and more persistent, central banks should ease cautiously.

Fiscal policymakers will have to find ways to accommodate rising spending needs in a sustainable way. In countries where public debt is already high, consolidation is warranted, and reprioritization is necessary to accommodate new spending needs.

Regarding trade policy, Europe—and indeed everyone—needs more trade.

The global trade regime has shifted, and some reallocation of resources and reconfiguration of value chains appear inevitable. At the same time, it is important to not over-react.

For example, while US-China tariffs may divert some trade to Europe, we estimate that even with April’s high tariff rates the aggregate effects would be small—to the order of 0.25 percent of EU GDP or about 3 percent of extra-EU imports. Although the effects could be more pronounced in certain industries, it is far from clear whether safeguard measures are required. Where measures are deployed, they must align with WTO principles, be time-limited, and clearly communicated.

Europe should avoid tariff escalation; and it should protect people, not stand in the way of structural change.

Let me now turn to the structural policies Europe needs to boost growth and resilience.

I will focus on EU and domestic reforms with the highest urgency and potential. I will emphasize their complementarity and the need to pursue comprehensive reform packages to enhance political support.

I will also highlight the key role that the next EU budget can play in supporting the reform effort, and ultimately secure Europe’s prosperity.

First, it is high time to reboot the EU single market.

Europe has come a long way, but the EU single market remains far from complete. For instance, it can take up to 6 months for an EU worker who relocates to another EU country to be legally employed there. Large differences across bankruptcy procedures discourage cross-border investment, while having national stock markets introduces vast inefficiencies in the allocation of capital across the continent. This fragmentation increases costs and hurts business dynamism and growth.

Full integration of the single market would yield tremendous benefits. Our modeling work shows that a 10 percent reduction in barriers to intra-EU goods trade and multinational production would lift GDP by around 7 percent [4]. But we need to take concrete steps in this direction. In a forthcoming paper [5], we list four priority areas:

1. Adopting high-quality insolvency rules within a 28^th regime for firms to simplify the regulatory landscape
2. Advancing the capital markets union to boost venture capital and equity investment
3. Increasing labor mobility across the EU, and
4. Better integrating the European electricity market

Presenting these reforms as a package may increase the buy-in from member states that see benefits in some areas more than others, while remaining realistic on feasibility.

We find that just this package of selected actionable measures could raise EU GDP by approximately 3 percent over the next 10 years—a significant downpayment on the full potential gains from completing the single market.

Second, advancing EU and domestic policy actions together would magnify the growth impact of reforms.

In another paper to be published in a few days [6], we also highlight the significant potential gains from domestic reforms.  A package of reform priorities addressing policy gaps in labor markets, business regulation, and credit and capital markets could boost output by approximately 5 percent in advanced European economies and up to 7 percent in CESEE countries over the medium term.

A coordinated reform effort at both domestic and EU levels would likely yield benefits that exceed the cumulative returns from isolated actions in the two areas. For example, advancing the capital markets union would boost the effect of domestic initiatives to support innovative startups. And improving skill levels at the national level will amplify EU R&D efforts.

Across all areas, think smart and big. Structuring reforms as “packages” in which everyone can see direct benefits can enhance domestic political support and facilitate successful implementation.

Third, the EU budget has the potential to be a powerful lever for advancing policy priorities across both the European Union and its member states.

The EU’s Multiannual Financial Framework (MFF) has helped tackle shared challenges—promoting economic convergence through cohesion policy and strengthening resilience via NextGenerationEU. To meet existing and emerging challenges, we suggest that the 2028–2034 MFF be revamped along three key lines [7].

1. Prioritize European public goods. The EU budget should allocate more resources to key areas of shared strategic interest—such as R&D, the clean energy transition, energy security, and defense. These are domains where collective investment delivers greater efficiency and cost savings compared to national-level efforts. To meet these needs, expenditure targeted at European public goods would need to increase from 0.4 percent of GNI to 0.9 percent.
2. Maximize the budget impact. With over 50 programs, the current EU budget is fragmented, limiting its effectiveness. Consolidating programs around core EU priorities and shifting toward a performance-based budgeting model would enhance efficiency, improve coordination among member states, and better align national reforms with EU-level objectives.
3. Strengthen financing through enhanced own resources and borrowing capacity. Establishing borrowing as a regular financing tool—backed by robust own resources for repayment—would enable more strategic, long-term investment while spreading the financial burden more evenly across time and member states.

Fourth, a more integrated Europe is also a more resilient Europe.

The spike and volatility in energy prices following Russia’s invasion of Ukraine, along with last month’s blackouts in Spain and Portugal, underscore the urgency of a coordinated European energy policy and establishing an integrated energy infrastructure.

On the financial side, advancing the capital markets union would not only channel savings into productive investment, but also facilitate portfolio diversification and significantly improve risk sharing.

Fiscal policy—particularly the EU budget—has an important role to play in supporting energy integration and risk sharing.

Let me conclude by stressing that Europe stands at a critical junction.

The world is changing, and Europe must once again demonstrate its ability to step up and deliver. Strengthening –and, yes, even upholding—prosperity requires a decisive and concerted reform push at both domestic and EU levels that enhances growth and resilience while maintaining openness to the world.

It is time to act now. It is time to act together.

References

[1] Eble, Stephanie, Alexander Pitt, Irina Bunda, Oyun Erdene Adilbish, Nina Budina, Gee Hee Hong, Moheb T Malak, Sabiha Mohona, Alla Myrvoda, and Keyra Primus. 2025. “Long-Term Spending Pressures in Europe,” IMF Departmental Papers 2025/002.

[2] Scott R. Baker, Nicholas Bloom, Steven J. Davis. 2016. “Measuring Economic Policy Uncertainty,” The Quarterly Journal of Economics, Volume 131, Issue 4, Pages 1593–1636.

[3] Boehm, Christoph E., Andrei A. Levchenko, and Nitya Pandalai-Nayar. 2023. “The Long and Short (Run) of Trade Elasticities,” American Economic Review 113 (4): 861–905.

[4] Baba, Chikako, Ting Lan, Aiko Mineshima, Florian Misch, Magali Pinat, Asghar Shahmoradi, Jiaxiong Yao, and Rachel van Elkan. 2023. “Geoeconomic Fragmentation: What’s at Stake for the EU,” IMF Working Paper 2023/245, International Monetary Fund, Washington, DC.

[5] Arnold, Nathaniel, Allan Dizioli, Alexandra Fotiou, Jan Frie, Burcu Hacibedel, Tara Iyer, Huidan Lin, Malhar Nabar, Hui Tong, and Frederik Toscani. Forthcoming. “Lifting Binding Constraints on Growth in Europe. Actionable Priorities to Deepen the Single Market,” IMF Working Paper.

[6] Budina, Nina, Oyun Adilbish, Diego Cerdeiro, Romain Duval, Balázs Égert, Dmitriy Kovtun, Anh Thi Ngoc Nguyen, Augustus Panton, and Catalina Michelle Tejada. Forthcoming. “Europe’s National-Level Structural Reform Priorities,” IMF Working Paper.

[7] Busse, Matthias, Huidan Lin, Malhar Nabar, and Jiae Yoo. Forthcoming. “Making the EU’s Multiannual Financial Framework Fit for Purpose,” IMF Working Paper.

[8] Darvas, Zsolt, and Conor McCaffrey. 2024. “Management of debt liabilities in the EU budget under the post-2027 MFF,” November 2024.

[9] Draghi, Mario. 2024. “The future of European competitiveness,” September 2024.

[10] Cimadomo, Jacopo, Massimo Giuliodori, Andras Lengyel, Haroon Mumtaz. 2023. “Changing patterns of risk-sharing channels in the United States and the euro area,” ECB Working Paper No 2849.

https://www.imf.org/en/News/Articles/2025/05/19/sp051925-ak-rising-to-the-challenge-europe-path-to-growth-and-resilience

MIL OSI

Source: IMF – News in Russian

May 19, 2025

Washington, DC: With the successful launch of the new data portal—the National Summary Data Page (NSDP) — the Central African Republic has implemented a key recommendation of the IMF’s Enhanced General Data Dissemination System (e-GDDS) to publish essential macroeconomic and financial data. The e-GDDS is the first tier of the IMF Data Standards Initiatives that promote transparency as a global public good and encourage countries to voluntarily publish timely data that is essential for monitoring and analyzing economic performance.

The launch of the NSDP is a testament to the Central African Republic’s commitment to data transparency. It serves as a one-stop portal for disseminating various macroeconomic data compiled by multiple statistical agencies. The published data include statistics on national accounts, prices, government operations, debt, the monetary and financial sector, and the external sector.

The launch of the NSDP was supported by an IMF technical assistance mission, financed by the Government of Japan through the Japan Administered Account for Selected Fund Activities (JSA), and conducted in collaboration with the African Development Bank (AfDB) from May 12 to 16, 2025. The mission was hosted by “Institut Centrafricain de Statistique et des Études Économiques et Sociales,” in close collaboration with the Bank of Central African States (BEAC) and the Ministry of Finance and Budget.

With this reform, the Central African Republic will join 75 countries worldwide and 33 countries in Africa using the e-GDDS to disseminate standardized data.  

Mr. Bert Kroese, Chief Statistician and Data Officer, and Director of the IMF’s Statistics Department, welcomed this as a major milestone in the Central African Republic’s statistical development. He went on to express that the country would benefit from the improvement in data transparency and that the IMF stood ready to “continue supporting the authorities in further developing their statistical systems.”

https://www.imf.org/en/News/Articles/2025/05/19/pr-25153-central-african-republic-car-implements-enhanced-general-data-dissemination-system

MIL OSI

Source: IMF – News in Russian

May 19, 2025

Maputo, Mozambique: Mr. Bo Li, Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement today in Mozambique at the end of his visit from May 15-17, 2025: 

“I am pleased to be in Mozambique for my first visit as IMF Deputy Managing Director. I would like to thank President Daniel Chapo, Finance Minister Carla Loveira, and Central Bank Governor Rogerio Zandamela, as well as other senior officials, for their hospitality and constructive discussions. We discussed opportunities to strengthen our continued partnership through regular policy dialogue and technical assistance. The IMF remains a close partner in supporting the country’s efforts to lift the living standards of the Mozambican people.

“During my visit, I also met with the Committee of Central Bank Governors of the Southern African Development Community (SADC) to advance efforts to improve cross-border payments within the regional bloc. Member countries remain committed to this joint objective and are making good progress. We also discussed opportunities to further strengthen ongoing technical assistance provided jointly by the IMF and the World Bank on cross-border payments. We look forward to continuing the tight and productive collaboration.”

https://www.imf.org/en/News/Articles/2025/05/19/pr-25152-mozambique-statement-by-imf-deputy-md-bo-li-at-the-conclusion-of-a-visit-to-mozambique

MIL OSI

Source: IMF – News in Russian

Tallinn, Estonia – May 19, 2025: Estonia is gradually re-emerging from a prolonged downturn but continues to grapple with higher prices and costs, a legacy of previous shocks, while high global policy uncertainty and rising trade barriers hinder a more vigorous recovery. Innovative young firms, a potential growth engine, are constrained by lack of skilled labor and limited access to capital markets. At the same time, fast-rising defense spending needs compound preexisting fiscal imbalances. In this context, the 2025 budget strikes an appropriate balance between sustaining spending efforts and containing the deficit. However, staff recommends implementing a further moderate adjustment starting from 2026 to address growing imbalances, stabilize the debt ratio, and preserve buffers. Carefully calibrated macroprudential policies, decisive domestic structural reforms aimed at easing reallocation of labor and reducing regulatory burden, and a deeper EU single market would be instrumental in building resilience and supporting growth in the medium term.

https://www.imf.org/en/News/Articles/2025/05/19/CS-Estonia-2025

MIL OSI

Source: IMF – News in Russian

May 16, 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. Based on the preliminary findings of this mission, 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 Nigerien Authorities have reached an agreement at the staff level on the seventh review of Niger’s economic program under the Extended Credit Facility (ECF) and the third review under the Resilience and Sustainability Facility (RSF).
• Economic growth is expected to remain robust at 6.6 percent in 2025, despite headwinds. Nonetheless, there are significant downside risks, particularly those linked to a tightening of financing conditions, to a reduction in development assistance and to the security situation.
• The Nigerien authorities remain committed to rapidly implementing key structural reforms under the program, including the adoption of a revised general tax code and the operationalization of the oil revenue management strategy.

Washington, DC: An International Monetary Fund (IMF) staff team led by Mr. Antonio David held meetings from May 5-16, 2025, on the seventh review of the arrangement with Niger supported by the Extended Credit Facility (ECF) and the third review of the arrangement under the Resilience and Sustainability Facility (RSF).

At the end of the mission, Mr. David issued the following statement:

“The Nigerien authorities and the IMF team reached a staff-level agreement on the seventh review of Niger’s economic program under the Extended Credit Facility and on the third review of the arrangement under the Resilience and Sustainability Facility. The staff-level agreement is subject to IMF Management and Executive Board approval. The Board meeting is expected to take place in July 2025. The ECF reviews’ completion would allow the disbursement of SDR 13.2 million (about US$ 17.8 million, or 10 percent of Niger’s quota) to cover external financing needs. In turn, completion of the third review of the RSF would allow for the disbursement of SDR 17.1 million (about US$ 23.1 million, or 13 percent of Niger’s quota).

“Economic growth is expected to remain robust at 6.6 percent in 2025, despite headwinds. Average inflation should recede to 4.2 percent, supported by a favorable harvest. Nonetheless, there are downside risks around the baseline. The security situation may affect economic activity, while fiscal space could be constrained due to a tightening of financing conditions and a reduction in development assistance.

“Fiscal consolidation efforts will continue in 2025, while preserving social spending. The projected 1.3 percentage points of GDP adjustment to reach the 3 percent of GDP target will be driven by stronger revenue mobilization, while total expenditure growth is projected to be contained. The Nigerien authorities will continue to pursue a prudent debt policy in light of risks and tight financing conditions, favoring concessional financing and grants.

“The arrangement under the Extended Credit Facility aims to strengthen macroeconomic stability and lay the foundations for resilient, inclusive, and private sector-led growth. Program performance has been broadly satisfactory against end-December 2024 and end-March 2025 targets. The authorities also made considerable progress in clearing debt service arrears.

“The Nigerien authorities remain committed to rapidly implementing key structural reforms under the program, including the adoption of a revised general tax code and the operationalization of the oil revenue management strategy. IMF staff welcomed the reinstatement of the supreme audit institution and looks forward to a full resumption of its activities. These reform efforts are essential to achieve the key program objectives of improving revenue mobilization and the quality and efficiency of public expenditures, promoting private sector development, as well as enhancing governance and transparency frameworks.

“RSF financing supports efforts to advance reforms and investments to address rising risks and challenges associated with climate change, thereby building resilience and safeguarding livelihoods. In the context of this review, the authorities have made good progress in implementing measures to strengthen the planning and budgeting of climate-related spending; and to improve the sensitivity of public investment management to climate-related issues.

“The mission met His Excellency Prime Minister and Minister of the Economy and Finance, Mr. Ali Mahaman Lamine Zeine. The mission also held working sessions with the Deputy Minister in Charge of the Budget, Mr. Mamane Sidi, the National Director of the BCEAO, Mr. Maman Laouali Abdou Rafa, as well as other senior government officials, private sector representatives, and development partners.

“The team would like to thank the authorities for their cooperation, and for the constructive and productive discussions.”

https://www.imf.org/en/News/Articles/2025/05/16/pr25149-niger-imf-reach-sla-seventh-review-ecf-third-review-rsf

MIL OSI

Source: IMF – News in Russian

May 16, 2025

Washington, DC: Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), announced today senior leadership changes at the Fund, including the planned retirement of a long serving department head and a leadership rotation across two departments.

Dominique Desruelle, Director of the Institute for Capacity Development (ICD), will retire from the IMF in October. He will be succeeded by Catriona Purfield, currently Director of the Human Resources Department (HRD). Brian Christensen, currently Director of the Corporate Services and Facilities Department (CSF), will in turn succeed Ms. Purfield as Director of HRD.

“These changes reflect our ongoing strategy of rotating senior leadership within the Fund — providing opportunities for career development while also preserving institutional knowledge,” said Mr. Georgieva. Ms. Purfield and Mr. Christensen will transition to their new departments on September 1, 2025.

“As Director of ICD, Dominique has strengthened the IMF’s capacity development (CD) work by improving governance, external delivery, partnerships, and internal economics training — integrating it more effectively with surveillance and lending,” said Ms. Georgieva. “His tireless commitment to serving the Fund’s membership ensured that ICD consistently brought world-class training and technical assistance to our member countries.”

Mr. Desruelle, a French national, joined the Fund in 1993 after a period in academia and worked as Advisor to the Executive Director for France. Over the years, he has served in a range of senior-level roles in several departments—including the African; European; Western Hemisphere; and Strategy, Policy and Review Departments — as well as Chief of Staff in the Office of the Managing Director. During his 32 years of service to the Fund, Mr. Desruelle also helped to establish and oversee the Knowledge Management Unit and led work in other key areas of Fund policy and operations, including surveillance, debt policies, and engagement in fragile states.

“Dominique will leave ICD in excellent standing to continue building the capacity of both staff and our membership,” Ms. Georgieva added. “We thank him for his many years of dedicated service and unwavering commitment to the Fund’s mission.”

https://www.imf.org/en/News/Articles/2025/05/16/pr25148-imf-announces-leadership-rotations-and-retirement-of-icd-director

MIL OSI

Source: IMF – News in Russian

May 15, 2025

An International Monetary Fund (IMF) mission, led by Mr. Jean-Guillaume Poulain, met with the Iraqi authorities in Amman and Baghdad during May 4–13 to conduct the 2025 Article IV consultation. The following statement was issued at the end of the mission:

A highly uncertain global environment, falling oil prices, and acute financing pressures, are taking a toll on economic activity and exacerbating Iraq’s existing vulnerabilities, calling for urgent measures to preserve fiscal and external stability. These include containing the fiscal deficit by mobilizing non-oil tax revenues and reining in the public wage bill, completing the restructuring of state-owned banks, and promoting private sector growth, by reforming the labor market, improving the business environment, enhancing governance and fighting corruption. Building on recent progress, the Central Bank of Iraq (CBI) should continue modernizing the banking system and supporting private banks in expanding their corresponding banking relationships.

Recent Economic Developments, Outlook and Risks

The non-oil sector grew at a slower pace last year and inflation remained subdued. Following a very strong growth of 13.8 percent in 2023, Iraq’s non-oil GDP is expected to have considerably moderated to 2.5 percent in 2024, driven by a slowdown in public investment and in the services sector, as well as a weaker trade balance. The agriculture, manufacturing, and construction sectors remained resilient, benefiting from post-drought recovery, expanded refining capacity, and strong growth in credit to households. The decline in oil production weighed on overall growth, which contracted by 2.3 percent for the year. Inflation dropped to 2.7 percent by end-2024, amid lower food price inflation and liquidity absorption from the CBI.

The fiscal position has deteriorated, along with external balances. The 2024 fiscal deficit is estimated at 4.2 percent of GDP, compared to 1.1 percent in 2023, reflecting rising spending on wages and salaries and energy purchases. Financing constraints have led to reemergence of arrears notably in energy and capital expenditure. On the external front, the current account surplus narrowed sharply from 7.5 percent to 2 percent of GDP, due to a surge in goods imports. Nonetheless, external buffers remain strong, with reserves at US$100.3 billion at end-2024—covering over 12 months of imports.

Non-oil growth is projected to remain subdued in 2025 amid a challenging global environment and financing constraints. Non-oil GDP is projected to slow down to 1 percent this year as the impact of falling oil prices and financing constraints weigh on government spending and consumer sentiment. The current account is expected to weaken considerably in 2025 primarily due to declining oil export revenues. The deterioration in the external position is projected to weigh on foreign reserves.

Policy Priorities

Iraq’s vulnerabilities have increased in recent years due to a large fiscal expansion. Beside weighing on prospects of private sector-led growth, current public employment policies and resulting wage costs are unsustainable given Iraq’s low non-oil tax base. Accordingly, dependence on oil revenues has worsened, and the oil price required to balance the budget increased to around $84 in 2024, up from $54 in 2020.

These challenges have been exacerbated by the sharp decline in oil prices in 2025, requiring an urgent policy response. In the very short-term, the authorities should review current and capital spending plans for 2025 and limit or postpone all non-essential expenditure. At the same time, there may be scope to increase non-oil revenues by revising customs duties as well as introducing or raising excise taxes. The authorities should also explore options to diversify the creditors base for increasing financing availability. Monetary financing of the deficit should be avoided as it could fuel inflation, drain FX reserves, and weaken the CBI’s balance sheet.

More broadly, a sizable fiscal consolidation is needed to mitigate macro-fiscal risks, ensure debt sustainability, and rebuild fiscal buffers. On the revenue side, besides customs duties and excise taxes, there is scope to gradually reform personal income tax by limiting exemptions and increasing rates. Strengthening tax administration—through digitalization, improved enforcement, and better collection—is essential. A more effective tax administration should allow for eventually introducing a general sales tax. On the spending side, curbing current expenditures, particularly via comprehensive wage bill reforms, limiting mandatory hiring, and adopting attrition rule, would yield significant savings. Recent efforts to better target the public distribution system are welcome, but there is scope to further improve targeting and eventually shift to cash-based social safety nets. Finally, it is urgent to reform the public pension system through raising the retirement age and reducing both the accrual and replacement rates is needed to enhance its sustainability.

Implementing these reforms would also create fiscal space to increase capital spending. Expanding non-oil investment, especially in trade and transportation infrastructure should help economic diversification. Substantial investments are also required to modernize the electricity sector and develop natural gas resources, both of which are essential for improving energy security and reducing dependence on gas imports. Improved procurement, public financial management, and corruption control would enhance the effectiveness of any additional public investment.

Further efforts are needed to mop up excess liquidity in order to improve monetary policy transmission. While the CBI has made progress in absorbing excess liquidity, additional adjustments could enhance the effectiveness of the framework. Key measures include increasing the issuance of CB-bills, focusing on the short maturity (14-day) at the policy rate, revising size limits on individual banks’ bids, and improving liquidity forecasting tools and practices. To safeguard its balance sheet and preserve credibility, the CBI should continue to avoid financing the government deficit.

The mission commended the CBI for the successful transition to the new trade finance system. Trade finance is now fully processed by commercial banks through their correspondent banking relationships. This has also supported the recent decline in the spread between the official and parallel market exchange rates. Nonetheless, further efforts are needed to further reduce the spread, including by imposing Iraqi dinar usage for car and real estate transactions, improving customs controls to curb smuggling, and simplifying FX access.

While initial steps to reform state-owned banks are encouraging, broader efforts are needed to strengthen the financial sector. The restructuring plan for state-owned banks should be finalized without delay, encompassing treatment of non-performing loans, and recapitalization needs. In parallel, the mission welcomed progress in digitalization and the authorities’ intention to undertake a comprehensive banking sector overhaul. Reforms should include enhancing corporate governance, digital infrastructure, and cybersecurity, while promoting a stronger role for private banks. Efforts to enhance AML/CFT measures by tackling the deficiencies identified in the MENAFATF Mutual Evaluation report should continue.

Chronic power shortages, electricity losses and excessive tariff subsidization continue to weigh on the economy. Addressing inefficiencies in the electricity sector is important for fiscal sustainability and improving productivity. In 2024, distribution losses reached 55 percent, driven by theft and illegal connections, leading to significant financial losses. The authorities are deploying smart meters and have introduced other measures to enhance billing and collection. However, progress should be accelerated. Once collection substantially improves, achieving cost recovery will also require electricity tariff increases, with carefully calibrated subsidies targeted to low-income users. Recent disruptions in electricity imports from Iran further underscore the need for diversified supply and the development of gas projects.

Combating corruption and governance weaknesses is imperative to support economic development. Steps taken in the implementation and upgrade of the national anticorruption strategy and the improvements in corruption perception indices are positive developments. However, corruption remains a significant hurdle for growth. Strengthening accountability frameworks for the operation of state-owned and private enterprises in the oil, electricity and construction sectors is critical, and thorough compliance with Extractives Industries Transparency Initiative standards and the enactment of the law on Transparency and Access to Information should be prioritized. Additionally, aligning anticorruption legal frameworks with international covenants and best practice, and strengthening the independence of the judiciary are essential for effective enforcement and for the protection of economic rights.

A comprehensive structural reform agenda is essential to unlock growth potential. The mission estimates that a comprehensive set of reforms covering the labor market, business regulation, the financial sector and governance could double non-oil potential GDP growth over the medium term. On labor market, priorities include increasing labor force participation, particularly among women, by improving female education and further reducing barriers to their work and mobility, and reforming public sector hiring, which distort labor markets and reduce productivity. Efforts to better align skills with labor market needs should intensify. More generally, simplifying regulations and reducing bureaucratic impediments in e.g. business registration or tax administration should increase participation in the formal economy and help private sector development.

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

https://www.imf.org/en/News/Articles/2025/05/15/mcs-iraq-concluding-statement-of-the-2025-imf-article-iv-mission

MIL OSI

Source: IMF – News in Russian

May 15, 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. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.

• Singapore’s economy recovered in 2024 but is forecast to slow down in 2025 due to the recent escalation of global trade tensions. Inflation is expected to stay muted.
• Fiscal and monetary policies are appropriately supporting the economy. Singapore has ample fiscal space to provide additional temporary and targeted support in case downside growth risks materialize.
• Singapore’s financial sector remains sound and resilient, underpinned by well-capitalized and liquid banks. Potential financial sector risks from tightening global financial conditions should continue to be closely monitored.

Washington, DC: An International Monetary Fund (IMF) team, led by Mr. Masahiro Nozaki, conducted discussions on the 2025 Article IV Consultation with the Singaporean authorities and other stakeholders from May 5 to May 15, 2025. At the conclusion of the discussions, Mr. Nozaki issued the following statement:

“Singapore’s economy recovered strongly in 2024 and disinflation advanced. Growth increased to 4.4 percent in 2024, from 1.8 percent in 2023, supported by an upturn in the global technology cycle. Headline inflation decreased to 1.5 percent in end-2024 and further to 0.9 percent in March 2025, reflecting disinflation in both tradable and non-tradable prices.

“However, the recent escalation of trade tensions and an associated spike in global policy uncertainty—as highlighted in the April 2025 World Economic Outlook—have sharply weakened Singapore’s economic outlook. Growth is projected to slow to 1.7 percent in 2025. Inflation is expected to stay muted, with headline inflation and Monetary Authority of Singapore (MAS) Core Inflation forecast at 1.1 percent and 1.0 percent in 2025, respectively, due to emerging slack in the economy and projected declines in commodity and other tradables prices from slower global growth.

“There is a high degree of uncertainty around this forecast, reflecting elevated global economic and policy uncertainty. Risks to growth are firmly tilted to the downside, stemming from a possible further escalation of global trade tensions and a sharp tightening of global financial conditions. While risks to inflation are tilted to the downside due to weaker-than-expected global and domestic growth, potential upside inflation risks, including from possible supply chain disruptions, should also be monitored.

“Against this backdrop, MAS appropriately loosened monetary policy in January and April 2025. In view of weak inflation, slowing growth, and emerging slack in the economy, staff sees scope for further monetary policy easing in the near term. However, MAS should remain vigilant and data dependent with respect to the speed and magnitude of easing in light of the large uncertainty, as well as both upside and downside risks around the inflation outlook.

“The expansionary fiscal stance for FY2025 (April 2025-March 2026) is appropriate against the backdrop of slowing growth, increasing economic slack, and elevated downside risks. Continued support to households and firms will provide ongoing relief, while enhanced infrastructure spending will support domestic demand and help promote long-term growth. Singapore has ample fiscal space that can be deployed to provide targeted and temporary fiscal support in the event of downside risks materializing. Over the medium term, currently untargeted transfers should be phased out or better targeted to vulnerable households and firms. With strong fiscal institutions and buffers, Singapore is well positioned to meet its medium-term fiscal spending needs, including for rising healthcare costs due to an aging population, scaling up high-quality public infrastructure, and strengthening social safety nets.

“Singapore’s financial sector is resilient. Banks are well capitalized, have ample liquidity, and are profitable. The authorities’ regulatory and supervisory efforts have contained existing financial sector vulnerabilities, including from cross-border exposure, reliance on foreign exchange funding, residential and commercial real estate exposures, interconnectedness between banks and nonbank financial institutions (NBFIs), and exposures to relatively small segments of highly leveraged corporates and households. Nonetheless, in view of the risk of a sharp tightening of global financial conditions, continued vigilance is warranted against these vulnerabilities.

“We welcome the steady implementation of the authorities’ Forward Singapore initiative, including enhanced paid parental leave to support young families; enhanced grants for low-income first-time home buyers to improve housing affordability; and additional transfers to improve the retirement adequacy for low-income workers and retirees. The introduction of temporary financial support for involuntarily unemployed individuals has helped strengthen Singapore’s social safety nets. The government continues to make progress with helping workers to reskill and firms to adopt AI technologies.

“The IMF team would like to thank the authorities and other counterparts for their close collaboration and productive discussions.”

https://www.imf.org/en/News/Articles/2025/05/15/pr25147-singapore-imf-completes-2025-aiv-mission

MIL OSI

Source: IMF – News in Russian

Kristalina Georgieva, Managing Director, IMF

May 14, 2025

Good morning and a very warm welcome to everybody, those who are in the room and those who join us online.

It is my great pleasure to join you because the topic that you will be discussing truly affects countries, businesses, communities, in a way that slows down progress and makes it harder for countries that are still falling behind to catch up.

We all know the data. Global public debt is expected to approach 100 percent of global GDP by the end of the decade. In other words, we would owe as much as we generate in one year. And this is worse than what we had during the pandemic.

You all know that governments are wrestling with tight budgets. And now with trade policy uncertainty, the fiscal trade-offs are going to be even more complicated. This is a problem everywhere in countries rich and poor, but it is particularly painful for emerging markets and developing economies, where the mounting cost of servicing debts is squeezing their ability to make investments and to respond to shocks.

It is against this backdrop that at the Fund we have been doing extensive work on issues of global debt architecture and sovereign debt restructurings. These efforts have intensified since the pandemic, and you are all aware we came up with the Common Framework, and then we realized we needed to have an inclusive space for debtors and creditors, both public and private, so we created the Global Sovereign Debt Roundtable. I see people who are members, and I want to appreciate all those who are engaged in it.

We are also actively working with authorities in Paris Club and non-Paris Club countries to bring everybody to the table for debt restructuring. Our engagement seeks to improve coordination, ensure that countries play by global rules, and very important, that there is comparability of treatment across creditors during debt restructuring.

Five years ago, much less was known about the magnitude and nature of lending from non-Paris club creditors, or how to encourage their involvement in debt restructuring. Since then, we need to recognize that significant progress has been made in helping improve transparency in lending practices and encouraging fair burden sharing across creditors, including the non-Paris Club countries.

Overtime, the G20 Common Framework has become more efficient and work in this regard continues. We are not done. We also see that the Global Sovereign Debt Roundtable plays a significant role as evidenced by the recent publication of the Sovereign Debt Restructuring Playbook. You play by the book, you get things done fast. It spells out steps to speed up the restructuring process, and it defines countries’ accountability for their actions. Importantly, this also includes compiling data to give a clear picture of domestic and external debt and the creditors who hold this debt.

So why is debt transparency so important? For the reasons we were describing – Yan in her introduction, then we saw the little movie and now me.

We have high level of debt and on top of it, countries are increasingly using complex forms of financing that are often opaque. New debt instruments have emerged such as guaranteed, securitized and collateralized debt contracts linked to. public-private partnerships, state-owned enterprises and pension funds. And because of the novelty and complexity of these instruments, our experience is that too much debt remains hidden from the eyes of policymakers and from the public. And too often it comes to light only when it is late, through the debt restructuring process.

Hidden debt inflicts real costs. It saps investor confidence. It increases borrowing costs. And it puts debt sustainability at risk, which can lead to a debt crisis.

Simply put, you cannot manage what you cannot see. And this is why we need light to cut through the fog surrounding the mountain of debt. We need the right laws and requirements in both borrower and creditor countries to defer the decision-making to competent bodies so they can do what is right for debt reporting and debt management. And that is the topic of today’s conference, this is what you will be doing here.

Let me say a little bit about our work at the Fund.

As we heard from Yan, we have identified debt transparency as a public good, and we have done a lot of work already.

Even if it is not labeled as debt transparency at the heart of it, when we support debt management in countries, this is what we do. Let me give you three examples.

First, back in 2023, we published a paper on ‘Making Public Debt Public.’ It looked at factors that underlie the lack of disclosure and the IMF’s role in reforms. We found that debt disclosure in boring low-income countries and emerging market economies falls way short due in large part to the increasing share of non-marketable and SOE debt. And in keeping with the theme of today’s conference, gaps in borrowing countries’ domestic, legal, institutional, and operational frameworks hinder transparency. We ought to close those gaps.

Second, our debt limit policies now require more detailed transparency on debt information. Including for the first time, we require the publication of the holders of a country’s public debt.

Third, in our Article IV consultations, we introduced a more structured and transparent assessment of data adequacy on debt, where broader and more granular debt data will be required. And this assessment will inform not just us, it would inform countries, and it would inform those interested to invest in countries.

We have scaled up our training on debt transparency. We have delivered over 200 capacity development projects just on debt management in the last two years.

How many of you have been following our spring meetings this year? So, for those who were here and for those who weren’t, a very important message that came out of this meeting was, countries need to put their own house in order. It was a line I used in my curtain raiser speech. And then I was so delighted to hear it played back to me by country delegations. They would say, it is tough, we have to get our own house in order and getting your own house in order absolutely requires transparency.

Good law drives good practices, and it drives good arrangements. There are many questions countries need to answer. They need to answer ‘who has the authority to borrow on behalf of the country,’ ‘who can sign a valid contract,’ ‘can the state’s resources be used as collateral?’ We look at the law for answers to these questions and I can tell you, they seem obvious and yet there are so many countries in which they still need to be answered.

Our Legal Department reviews debt-related legislation, as we heard from the movie, from the little clip. They did the review for 85 countries and we found several areas for improvement in legal frameworks. Less than half of the country surveyed require debt management and fiscal reporting. It’s a big gap we have to close. In many cases, the legal definition of public debt is too narrow. It excludes SOEs or it excludes types of borrowing and as a result some forms of that fall outside the sovereign’s awareness. When we are in a situation like this, we do have to (a) recognize what the gaps are, (b) work together to close these gaps, and I can tell you at the Fund we are at the disposal of our members to do exactly that.

We have in this conference policymakers from 72 countries. We have representatives of civil society organizations, from private sector and academia. And I am very uplifted because I think together we can make a difference. And from our side, we intend to work hard to be part of making that difference.

First, our upcoming review of debt sustainability analysis for low-income countries will consider how we can better support debt transparency. It complements the completion of a similar review of that sustainability analysis for market access countries. And I would welcome engagements as we go with this review.

Second, our work on the Global Sovereign Debt Roundtable and the Common Framework will engage constructively all relevant parties so they do their part for debt transparency. In the recent meeting of the Global Sovereign Debt Roundtable, there was a very strong commitment to it, let’s get it done. Debtors can be more transparent about the debt on their books. Creditors can be more forthcoming in outlining what they are lending for. And I think we can, working together, get really good data. So good debt management becomes the norm, not the exception.

And third, we will systematically draw lessons from experience in our surveillance program and capacity development engagements to develop and share best practices in advancing debt transparency. We will periodically report on progress in strengthening legal frameworks for debt transparencies as part of our reporting on progress with the multi-pronged approach to reduce debt vulnerability. In other words, we concretely commit specifically to how we are going to act to advance this agenda.

Accurate information is so critical. I’m sure you know the saying ‘garbage in, garbage out.’ What we want is to clean the garbage.

Benjamin Franklin, to paraphrase his words, we can say ‘transparency is always good policy.’

Enjoy your work here. Have fun, get things done. Thank you.

https://www.imf.org/en/News/Articles/2025/05/14/sp051425-managing-director-remarks-public-debt-transparency

MIL OSI

Source: IMF – News in Russian

May 14, 2025

Washington, DC:  After concluding the 2025 Article IV consultation with Costa Rica on May 12, 2025, the International Monetary Fund (IMF) Executive Board met on the same day in an informal session^[1] to discuss a request from the authorities for a two-year arrangement under the Flexible Credit Line (FCL) with the IMF in an amount equivalent to SDR 1.1082 billion (300 percent of quota or about US$1.5 billion). The authorities intend to treat the credit line as precautionary.

The FCL is reserved for countries with very strong policy frameworks and track records in economic performance. It helps safeguard countries by providing them with upfront access to IMF resources in case needed if future external shocks materialize. The FCL also permits qualifying countries to signal continued commitment to very strong institutional frameworks and macroeconomic and financial policies. Unlike the Extended Fund Facility (EFF) arrangement, which the authorities completed in 2024, the FCL has no ex-post conditionality.

On the basis of Costa Rica’s very strong economic fundamentals, institutional policy frameworks, and track record, IIMF Managing Director Kristalina Georgieva intends to recommend approval of the FCL arrangement for Costa Rica when the IMF Executive Board meets again to take a decision in the following weeks. The IMF stands ready to continue its fruitful engagement with Costa Rica.

^[1] During an informal session, IMF staff engages with Executive Board Members to discuss country matters where no formal board decision is expected.

https://www.imf.org/en/News/Articles/2025/05/14/pr25146-costa-rica-imf-receives-request-for-fcl-arrangement

MIL OSI