Category: Russian Finance

Source: IMF – News in Russian

Statement by IMF MD Kristalina Georgieva on the Passing of Former IMF FDMD Stanley Fischer

June 1, 2025

Washington, DC: Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), issued the following statement today after news of the death of Mr. Stanley Fischer, former IMF First Deputy Managing Director:

“We are deeply saddened to learn of the passing of our dear friend Stan Fischer, who among many career achievements, served as the First Deputy Managing Director of the IMF between 1994 and 2001. Stan will be remembered for his enormous influence on the economics profession, first as a leading academic and teacher, then as an accomplished policymaker across many prominent posts. During his time at the IMF, he helped lead the Fund’s response to a number of significant challenges, including the Mexican crisis of 1994 and the 1997 Asian financial crisis. To this day, Stan is deeply admired by Fund staff, management and the membership for his intellectual leadership, personal integrity, and dedication to public service. He believed strongly in the Fund’s core mission, as he put it: ‘to promote principles of good economic citizenship, and provide a forum for countries to discuss issues of mutual interest.’

“As an academic at the University of Chicago and MIT, Stan’s research had a profound effect on the field of macroeconomics, becoming a leading figure in the New Keynesian movement. Stan taught, mentored and influenced many leading policymakers and thought leaders. During his extraordinary policymaking career, he served as Chief Economist of the World Bank before becoming First Deputy Managing Director of the IMF. From 2005 until 2013, he served as Governor of the Bank of Israel, helping to steer the Israeli economy through the global financial crisis. He then became Vice-Chair of the Board of Governors of the Federal Reserve System in 2014, serving in that role until 2017. As a central banker, he was a staunch proponent of inflation targeting frameworks, transparency, and central bank independence.

“On behalf of the IMF, I extend my deepest condolences to Mr. Fischer’s three children Michael, David and Jonathan and their families. Stan led a life of exemplary public service, matched only by his innate goodness as a colleague, friend and human being.”

https://www.imf.org/en/News/Articles/2025/06/01/pr-25169-statement-by-imf-md-kristalina-georgieva-on-the-passing-of-former-imf-fdmd-stanley-fischer

MIL OSI

Source: IMF – News in Russian

May 30, 2025

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV consultation[1] for Bolivia on May 2. The authorities have consented to the publication of the Staff Report prepared for this consultation.[2]

Bolivia’s real GDP growth has moderated to 2.1 percent in the first three quarters of 2024, driven by a decline in hydrocarbons production, a slowdown in services activity, and a drop in soy crops and related manufacturing due to ‘El Niño’ effects. The economy has also faced disruptions from road blockages and scarcity of foreign exchange (FX)―given critically low international reserves―fuels and other critical inputs. High import costs, weak agricultural production, and road blockages pushed inflation to 10 percent at end-2024, the highest level in over a decade. Unemployment has fallen, but underemployment is rising, and real incomes retrenched on average. The combination of FX shortages, slowing activity, and depreciation of the parallel exchange rate resulted in a compression of the current account deficit to 2.7 percent for 2024. The fiscal deficit surpassed 10 percent of GDP in 2023-24 with declining hydrocarbon revenues, tax exemptions, increased social spending, and higher interest payments. The deficit has been mostly financed by the central bank amid tight external financing constraints. Public debt has increased to 95 percent of GDP.

The financial sector remains well buffered. However, deposits declined in real terms and net interest margins are pressured by interest rate controls, limiting banks’ ability to raise loan rates amid rising inflation and slowing credit growth. Banks have experienced improved profitability from FX trading gains, resulting in a strengthened capital adequacy ratio of 13.5 percent in 2024, while non-performing loans have remained low at 3.2 percent of total loans.

 

Executive Board Assessment[3]

Executive Directors agreed with the thrust of the staff appraisal. They expressed concern over Bolivia’s acute fiscal and external imbalances and unsustainable policy mix and called for urgent actions to address the overvalued exchange rate, bolster foreign reserves, and implement sustained fiscal consolidation. Directors cautioned that inaction could lead to a painful disorderly adjustment and underscored the Fund’s readiness to support the authorities through its various activities. They encouraged the staff to continue to closely engage the authorities on the needed adjustments. Careful communication of the policy reforms to stakeholders would be pivotal to enhance their acceptability.

Directors stressed that the untenable peg to the U.S. dollar and depleted international reserves call for a decisive shift in the monetary policy framework. They called for a realignment of the exchange rate with market fundamentals, moving toward greater exchange rate flexibility, and for front loaded fiscal consolidation and restrictive monetary policy settings, which would address inflationary pressures, alleviate FX shortages, and allow elimination of FX restrictions. Increasing interest rate flexibility will facilitate effective monetary policy transmission.

Directors recommended a credible and sustained fiscal consolidation by rationalizing the public wage bill, phasing out fuel subsidies, enhancing public investment management and spending efficiency, and mobilizing tax revenue. Eliminating monetary financing of fiscal deficits is also important. Directors also emphasized the need to mitigate the effects of the policy adjustments on vulnerable populations, including through improved targeting of the social safety net. A coherent fiscal framework can help underpin the consolidation plan.

Directors emphasized the need to strengthen financial sector supervision amid growing economic vulnerabilities. They called for close monitoring and contingency planning and encouraged the implementation of the remaining 2024 FSAP recommendations and strengthening the AML/CFT framework. Enhancing Bolivia’s public pension fund operations by diversifying investments and strengthening the pension supervisor’s independence is also important.

Directors called for comprehensive supply side reforms to enhance productivity and growth potential and facilitate external rebalancing by phasing out export ceilings, price controls, and credit quotas. They emphasized the need for a clear regulatory framework to attract private investment and to focus public investment on socially beneficial infrastructure projects. Further efforts to enhance transparency and the governance and anticorruption frameworks will also be important. Improving data adequacy also remains a priority.

It is expected that the next Article IV consultation with Bolivia will be held on the standard 12 month cycle.

Table 1. Bolivia: Selected Economic Indicators, 2023-30

Population (millions, 2024) 11.3 Poverty rate (percent, 2023) 36.5 Population growth rate (percent, 2024) 1.4 Adult literacy rate (percent, 2023) 95.2 Life expectancy at birth (years, 2024) 68.7 GDP per capita (US$, 2023) 3,736 Total unemployment rate (2024Q3) 3.6   IMF Quota (SDR, millions) 240.1     Est. Proj.     2023 2024 2025 2026 Income and prices Real GDP 3.1 1.3 1.1 0.9 Nominal GDP 2.6 6.5 16.4 16.9 CPI inflation (period average) 2.6 5.1 15.1 15.8 CPI inflation (end of period) 2.1 10.0 15.6 16.8 Combined public sector Revenues and grants 27.8 28.4 24.8 24.2    Of which: Hydrocarbon related revenue 1/ 2.8 2.2 1.9 1.6 Expenditure 38.7 38.7 37.5 37.4    Current 32.3 33.2 32.5 32.6    Capital 2/ 6.4 5.4 5.0 4.8 Net lending/borrowing (overall balance) -10.9 -10.3 -12.7 -13.2    Of which: Non-hydrocarbon balance -15.4 -16.4 -16.3 -16.0 Total gross NFPS debt 3/ 90.8 95.0 90.4 91.4 External sector Current account -2.5 -2.7 -2.6 -3.2 Exports of goods and services 26.2 20.7 18.0 16.0    Of which: Natural gas 4.5 3.3 2.3 1.8 Imports of goods and services 28.6 23.4 20.4 18.9 Capital account 0.0 0.0 0.0 0.0 Financial account (-= net inflow) -2.0 -3.5 -2.8 -3.3    Of which: Direct investment net 0.0 -0.2 -0.2 -0.1    Of which: Other investment, net -1.5 -2.1 -2.3 -3.4    Of which: Unidentified financing inflows 0.0 0.0 -1.4 -3.2    Of which: Unidentified financing inflows 0.0 0.0 1.9 2.8 Net errors and omissions -4.8 -2.6 0.0 0.0 Terms of trade index (percent change) 1.2 -2.3 -1.6 -0.2 Central Bank gross foreign reserves 4/ 5/ 6/ In millions of U.S. dollars 1,808 2,009 2,118 2,199 In months of imports of goods and services 1.9 2.1 2.0 2.0 In percent of GDP 4.0 4.1 3.8 3.3 In percent of ARA 20.6 23.0 22.3 20.5 Money and credit Credit to the private sector (percent change) -2.1 4.0 7.5 7.2 Credit to the private sector (percent of GDP) 70.8 69.2 63.9 58.6 Broad money (percent of GDP) 90.2 87.5 85.7 86.9 Memorandum items: Nominal GDP (in billions of U.S. dollars) 45.5 48.4 56.3 65.9 Bolivianos/U.S. dollar (end-of-period)  7/ 6.9 … … … REER, period average (percent change) 8/ -1.5 … … …   Oil prices (in U.S. dollars per barrel) 80.6 79.2 72.0 68.2   Energy-related subsidies to SOEs (percent of GDP) 9/ 3.9 4.0 3.4 2.9 Sources: Bolivian authorities (MEFP, Ministry of Planning, BCB, INE, UDAPE); IMF; Fund staff calculations. 1/ Excludes YPFB profits/losses. 2/ Includes net lending. 3/ Public debt includes SOE’s borrowing from the BCB (but not from other domestic institutions) and BCB loans to FINPRO and FNDR. 4/ Excludes reserves from the Latin American Reserve Fund (FLAR) and Offshore Liquidity Requirements (RAL). 5/ All foreign assets valued at market prices. 6/ Includes a repurchase line of US$99.2 million maturing in 2025. 7/ Official (buy) exchange rate. 8/ The REER based on authorities’ methodology is different from that of the IMF (see 2017 and 2018 Staff Reports). 9/ Includes the cost of subsidy borne by public enterprises and incentives for hydrocarbon exploration investments in the projection period.

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

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

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

https://www.imf.org/en/News/Articles/2025/05/30/pr-25168-bolivia-imf-concludes-2025-art-iv-consult

MIL OSI

Source: IMF – News in Russian

May 30, 2025

• IMF staff and the Ethiopian authorities have reached staff-level agreement on economic policies to conclude the third review of the four-year US$3.4 billion Extended Credit Facility arrangement. Once approved by the IMF Executive Board, Ethiopia will gain access to about US$260 million in financing.
• Ethiopia’s macroeconomic performance has exceeded program expectations, with better-than-forecast results for inflation, export growth, and international reserves.
• Maintaining reform momentum remains essential for consolidating recent gains, correcting macroeconomics imbalances, restoring external debt sustainability, laying the foundations for high, private sector-led growth, and ensuring the success of Ethiopia’s homegrown reform agenda.

Washington, DC: A staff team from the International Monetary Fund (IMF) led by Mr. Alvaro Piris, visited Addis Ababa from April 3 to 17, 2025, to discuss the 2025 Article IV consultation and the third review under the Extended Credit Facility (ECF). Discussions continued at the Spring Meetings in Washington DC, April 21-28, and subsequently. The ECF arrangement was approved by the IMF Executive Board on July 29, 2024, for a total amount of US$3.4 billion (SDR 2.556 billion). Subject to approval by the IMF Executive Board, the third review will make available about US$260 million (SDR191.7 million), bringing total IMF financial support under the ECF arrangement so far to about US$1,849 million (SDR1,406.4 million).

Today, Mr Piris issued the following statement:

“The IMF staff team and the Ethiopian authorities have reached staff-level agreement on the third review of Ethiopia’s economic program under the ECF arrangement. The agreement is subject to the approval of IMF management and the Executive Board in the coming weeks. A memorandum of understanding with official creditors is expected to be agreed ahead of the IMF Board’s consideration of the third review.

“The authorities’ policy actions in the first year of the program have yielded strong results. The transition to a flexible exchange rate regime has proceeded with little disruption. Measures to modernize monetary policy, mobilize domestic revenues, enhance social safety nets, strengthen state-owned enterprises, and anchor financial stability continue to show encouraging results. Macroeconomic indicators have performed better than expected, with substantially better outcomes than forecast for inflation, goods exports, and international reserves.

“Recent policy action should help deepen the FX market and tackle remaining distortions. While real exchange misalignment has been corrected and FX availability has improved from a year ago, the spread between the official and parallel market widened again in early 2025 and high fees and commissions persist. Actions that are being rolled out to enhance transparency, reduce costs, ease restrictions on current account transactions, and strengthen prudential regulation will help to improve the functioning of the FX market.

“Maintaining reform momentum will be key to consolidating gains and securing sustainable high growth. Continued tight monetary and financial conditions will be important for managing inflation and exchange rate expectations. Further revenue mobilization is needed to provide sustainable financing for critical development spending. Reforms to improve the business environment, ensure fair taxation practices, encourage foreign direct investment, and facilitate open dialogue with business will be important to secure private sector investment. Efforts to end the remaining elements of financial repression and develop the capital market will help to mobilize savings and support the efficient allocation of capital.

“The staff team is grateful to the authorities for the excellent policy discussions and their strong commitment to the success of the IMF-supported economic program. The team met with Minister of Finance Ahmed Shide, Governor of the National Bank of Ethiopia Mamo Mihretu, State Minister of Finance Eyob Tekalign, and other senior officials. Staff also had productive discussions with representatives of banks and businesses that are operating in a range of sectors and representatives of civil society.”

https://www.imf.org/en/News/Articles/2025/05/30/pr-25167-ethiopia-imf-staff-conclude-art-iv-discuss-and-reach-agreement-on-3rd-rev-of-ecf

MIL OSI

Source: IMF – News in Russian

Opening Remarks by Kristalina Georgieva, IMF Managing Director, at the CESEE High-Level Conference in Dubrovnik, Croatia

May 30, 2025

Good morning and a very warm welcome to everyone!

I would like to begin by thanking Governor Vujčič for the kind invitation. Dear Boris: it is such a pleasure to return to Dubrovnik. Truly, a pearl of the Adriatic!

Since its first gathering here in 2017, this conference has become an important forum for policymakers to discuss the challenges confronting the region.

And, as usual, we have much to discuss: the successes, the unfinished business and, now, huge new challenges.

***

First, a few words on the successes.

Over the last three decades, reforms promoting economic openness and integration—first with the EU, then within the EU—have helped the countries of Central, Eastern and Southeastern Europe achieve a remarkable convergence with the standards of living of their more advanced peers.

Since the mid-1990s, incomes have more than doubled and the gap relative to the advanced Europe has shrunk sharply.

Manufacturing became a catalyst for productivity growth as integration into European and global value chains helped CESEE economies reach beyond their domestic markets.

At the same time, openness to FDI accelerated capital accumulation and technology transfer.

EU accession played a huge role. Powered by the domestic structural reforms put in place on the path to EU accession countries that joined the EU   accelerated their income convergence with the advanced Europe and outperformed comparable countries outside of the block.

Thus, it is fair to pause and say: well done.

***

Second, the unfinished business.

The journey is far from complete. Reforms slowed after EU accession. After the Global Financial Crisis, investment fell significantly and contributed to a productivity slump that has only worsened since Covid.

Various economic challenges were already calling out for revitalizing reforms. The demand for skilled workers is rising, but labor supply is tightening. High energy costs are hurting manufacturing competitiveness. New technologies in the auto sector—and AI—could alter export value chains.

So even before the latest global economic developments, there certainly was much more work to do.

***

And now, there are huge new challenges.

The sweeping disruptions to world trade that are underway are plain for all to see. World trade is being tested. And while most of the CESEE countries are less impacted directly, let us be very clear: the indirect impact is significant as these disruptions pose a major threat to the region’s main trading partners and to the overall economic model of openness that CESEE countries rely on.

Trade tensions and uncertainty complicate domestic and foreign investment plans. This is particularly painful for a region that needs access to modern production processes, jobs in high-productivity sectors, and export demand.

***

So here is my main message to you today: standing still, taking shelter, and hoping the storm will pass is not a plan. It would be much wiser to assume that many of the shifts we see are here to stay, and to act accordingly.

So, what should CESEE countries do in order to negotiate this stormy economic weather? How can they catch a tailwind from the “Adriatic Bora” and keep powering forward?

I would point to three critical priorities:

• Steering a steady course in terms of macroeconomic policy—monetary and fiscal policies for stability;
• Getting the ship into better working order so it can sail forward faster—that is, pursue structural policies for growth; and
• Integrating more deeply into and within the single market of the EU—strength through regional cohesion.

Let me briefly discuss each of these, in turn.

Priority one: action to mitigate uncertainty. The best antidote to uncertainty is a stable macroeconomic environment.

• Central banks must remain agile and focused on achieving their targets. Where inflation is still high and persistent, policymakers should tread cautiously. Clear communication is key. Independence lends credibility and must be protected.
• Fiscal policy must focus on ensuring sustainability and policy space. Countries with low deficits and debts can use fiscal space to invest in essential areas such as energy security. But in countries where fiscal space is limited, governments need to either reallocate spending or boost fiscal revenues.

Priority two: take decisive action to boost growth potential. In a new study, we find that domestic reforms across the CESEE region could lift GDP levels by 7 percent over the medium term. The potential goes up to 9 percent for the Western Balkans.

• Further productivity gains from better education, more efficient labor markets that allow talent to thrive, and cutting red tape are waiting to be tapped. In the Western Balkans and aspiring EU entrants, closing governance gaps with the EU frontier delivers the highest dividend. The case to act decisively is compelling.

Priority three—last but certainly not least: CESEE countries must ensure they retain the benefits of their economic integration with Europe and the global economy.

• Integration has been a major source of knowledge transfer and capital deepening, particularly through FDI. As is the case across the EU as a whole, the CESEE region would benefit from further progress in completing the EU’s single market.
• Our analysis shows that internal barriers add significant costs — for goods they are equal to 44 percent tariffs, and for services to a staggering 110 percent! Completing the single market can be a major factor in strengthening the performance of the EU economy and improving its attractiveness for investment.
• In a forthcoming working paper on Europe’s reform priorities, we outline several concrete steps: a more integrated electricity market; more capital for startups; better labor mobility across borders; and simpler regulations. Together, these measures could raise EU GDP by about 3 percent over the next ten years.
• In addition, we argue that the EU budget can lend more of a hand. Tying EU funds for public investment to progress on reform implementation would provide a double blessing: more central fiscal funding, and more effective use of it.

***

With that, let me conclude.

We at the IMF stand ready to support you, as we always have. Through our surveillance and technical assistance, we are committed to supporting the CESEE region unlock its growth potential. The steadily increasing demand we see for IMF capacity development, including in public investment management and central banking, testifies to our role as your partner in your quest for faster growth and stronger resilience.

The region is at a crossroads. Faced with structural headwinds and a much more volatile external environment, reinvigorating domestic reforms are now essential—to navigate the stormy seas and to unlock the region’s potential to sail faster.

The time to act is now. By moving decisively, you can transform the current challenges into opportunities and chart a brighter future for the region.

Thank you.

https://www.imf.org/en/News/Articles/2025/05/29/sp053025-growth-and-resilience-in-central-eastern-and-southeastern-europe-in-a-more-fragmented-world

MIL OSI