Category: Russia

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.

***

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

Source: IMF – News in Russian

May 23, 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 the São Toméan authorities have reached a staff-level agreement on the first review of the economic policies underpinned by the 40-month ECF-supported program. Most quantitative targets for the first review have been met and significant progress was made on a range of macro-structural issues.
• The authorities have made progress in re-building macroeconomic stability, improving the fiscal position, and advancing the government’s reform agenda. Inflation has declined from recent highs, due to global disinflation and a tight monetary stance. Growth is expected to pick up and inflation to further decelerate over the medium term.
• The authorities remain committed to the objectives established in the ECF-supported program approved by the IMF Executive Board in December 2024.

Washington, DC: An International Monetary Fund (IMF) staff team, led by Mr. Slavi Slavov, Mission Chief for São Tomé and Príncipe, held meetings in São Tomé during May 8-21, 2025, to discuss progress on the authorities’ reforms and policy priorities in the context of the first review of São Tomé and Príncipe’s 40-month program supported by the Extended Credit Facility (ECF). The arrangement was approved by the IMF Executive Board for a total amount of SDR18.5 million (around US$25 million) on December 19, 2024. The team also conducted discussions on the 2025 Article IV consultation.

At the conclusion of the visit, Mr. Slavov issued the following statement:

“The São Toméan authorities and IMF staff team have reached a staff-level agreement on the first review of São Tomé and Príncipe’s economic program supported by the ECF arrangement. Subject to approval by the IMF’s Executive Board, São Tomé and Príncipe would have access to about SDR 4 million (US$5.3 million), bringing the total IMF financial support disbursed under the current arrangement to around SDR 8 million (about US$10.6 million).

“Against an increasingly challenging global economic backdrop, the São Toméan economy remains relatively resilient, with growth of 1.1 percent in 2024 despite stubbornly high inflation, a tight policy mix, and the country’s vulnerability to climate change and natural disasters. Inflation remains in the low double digits, while core inflation has declined significantly. The pegged exchange rate has served as an anchor to support domestic stability, but the inflation differential with the Euro Area has put pressures on the fragile external position of the country.

“Growth is expected to reach 2.9 percent in 2025, accelerate further to 4.7 percent in 2026, and remain at around 3.5 percent over the medium term. This reflects the recovery of the agriculture sector and tourism, while private and public investments are expected to boost growth going forward. The IMF-supported program plays a catalytic role in mobilizing financial support and technical assistance from the country’s main development partners. Declining international oil prices are expected to reduce fiscal and external sector pressures, improving reserves accumulation and macroeconomic stability. Reforming the energy sector remains key to unlocking growth and alleviating pressures on public debt and foreign exchange reserves. The government has made significant strides in fiscal consolidation, reaching a domestic primary balance of zero in 2024, better than the targeted deficit of 0.5 percent of GDP.

“Discussions on the 2025 Article IV consultation focused on the importance of investing in resilient infrastructure and improving public investment management to reduce the country’s vulnerability to climate change and natural disasters. Discussions also covered improving inflation forecasting, liquidity management, and strengthening financial inclusion.

“The IMF staff team met President Carlos Vila Nova; Prime Minister Américo d’Oliveira dos Ramos; Minister of State for Economy and Finance Gareth Haddad do Espírito Santo Guadalupe; Acting Governor of the Central Bank Lara Simone Beirão; other government officials; representatives of the private sector including banks; and development partners. The mission expresses its deep appreciation to the authorities for their cooperation, hospitality, and constructive policy discussions.”

https://www.imf.org/en/News/Articles/2025/05/22/pr25157-sao-tome-and-principe-imf-reaches-sla-1st-rev-under-ecf-completes-2025-aiv-mission

MIL OSI