Category: Russian Finance

Source: IMF – News in Russian

Opening Remarks by Deputy Managing Director Kenji Okamura at the Tenth Tokyo Fiscal Forum

June 10, 2025

Good morning and welcome to the tenth Tokyo Fiscal Forum.

Let me first thank our co-hosts, Japan’s Ministry of Finance and the Asian Development Bank Institute for the excellent collaboration, and the Japanese government for its generous support.

At last year’s forum, I spoke about revenue collection and spending efficiency in the context of high public debt and low growth.

Since then, major policy shifts have occurred, and trade tensions have flared, leading to market turbulence and even to a brief period of turmoil in early April. Tensions have abated but policy uncertainty remains elevated.

This heightened uncertainty, together with tighter financial conditions, is weighing on growth prospects, amplifying debt risks in countries where debt levels are already high. In fact, our recently released Fiscal Monitor estimates public debt could increase by approximately 4.5 percent of GDP in the medium term because of a significant rise in uncertainty.

This is why our discussion today is focused on fiscal frameworks. In this rapidly changing environment, countries must prioritize putting their own fiscal house in order. This includes countries in the Asia-Pacific.

Public debt levels in the region, excluding China, are on average 20-26 percent of GDP higher relative to 2007. This will make it more difficult to manage the growing spending pressures from aging, development needs, and natural disasters.

Strengthening fiscal frameworks helps governments in the region tackle long-standing challenges and build fiscal buffers against uncertainties. For countries with high or rising debt, it would help reduce risks, while avoiding disruptive fiscal adjustments, ultimately improving long-term growth prospects.

I look forward to hearing more from our distinguished panel on this.

Tomorrow the forum will focus on GovTech, and how governments can harness the full potential of digitalization. The demand and development of digital products and services in Asia and the Pacific have accelerated quickly, outpacing most other regions. But more can be done to integrate emerging technologies, like AI, to improve the efficiency of public finances.

The panelists in tomorrow’s session will share their experiences applying some of the latest technologies.

On both these topics, the IMF is here to support you. In collaboration with the Asian Development Bank and World Bank, and through our Global Public Finance Partnership, we are ramping up our technical assistance. That said, this forum is an opportunity to hear from you. I welcome any suggestions you might have on how we can better tailor more of our advice to support your needs.

In these times of high uncertainty, fiscal policy can be an anchor for confidence and stability. Prudent policies, within a robust fiscal framework can deliver growth and prosperity for all.

Before concluding, I would like to thank Vitor for his leadership and contributions to this forum. This is the last time he’ll be participating as Director of the Fiscal Affairs Department, but his legacy as the founding father of the forum will live on.

With this, let me turn over to the conference organizers. I wish you a productive discussion over the next two days.

Thank you.

https://www.imf.org/en/News/Articles/2025/06/10/sp-fiscal-forum-navigating-uncertainty-by-putting-your-fiscal-house-in-order

MIL OSI

Source: IMF – News in Russian

June 10, 2025

As prepared for delivery

Introduction and Road Map

Good evening, everyone.

It is a great pleasure to join you here in Brasilia for the 55th Annual Meeting of the Caribbean Development Bank (CDB or the Bank).

Thank you Valerie for your very kind introduction. I also take this opportunity to thank the Bank for giving me the honor of delivering this year’s lecture in memory of Dr. William Gilbert Demas.

It is highly symbolic that this year’s meeting takes place in Brazil for the very first time. This symbolizes a new beginning and demonstrates the CDB’s broad and international coalition of shareholders all vested in CDB’s success.

The CDB is an incredibly important institution that has a vital role to play in the Caribbean’s development. It must be cherished, and supported, even as it delivers value to its borrowing and non-borrowing membership in harmonious partnership with all its stakeholders.

This is also the first CDB Annual General Meeting under the presidency of Mr. Daniel Best. It is therefore in order to, again, congratulate President Best and to wish him tremendous success.

Dr. Demas’s contributions throughout his career—as a policymaker, as an academic, and as an economist—cannot be overstated. He left a legacy of far-sighted vision and Caribbean excellence. A legacy that the whole region can be proud of.

We need to channel that vision and that excellence to meet two urgent priorities for the region. First, to lift growth prospects and living standards. And second, to build resilience against persistent economic shocks and natural disasters. These two objectives go hand in hand. We need the second to sustainably deliver on the first.

At a moment of exceptional uncertainty in the global economy, these tasks become even harder—and our efforts become even more urgent.

Today, I will address the growth and resilience challenge: both in the global context and in the context of the Caribbean region.

I will then discuss how regional policymakers can respond—by implementing sound macroeconomic policies and by following through on necessary structural reforms.

Finally, I will share how the IMF is supporting our members to boost growth prospects and build resilience in today’s uncertain global environment.

The Global Growth Challenge

Let me start with the global growth outlook.

After a series of shocks over the past five years, the global economy seemed to have stabilized—at steady but underwhelming rates, as compared with recent experience.

However, the landscape has now changed. Major policy shifts have signaled a resetting of the global trading system. In early April, the US effective tariff rate jumped to levels not seen in a century.

And, while trade talks continue and there’s been a scaling back of some tariffs, trade policy uncertainty remains off the charts.

 

As a result, we significantly downgraded our most recent global growth projections in the April World Economic Outlook—by 0.5 percentage point for this year, from 3.3 to 2.8 percent; and 0.3 percentage point in 2026, from 3.3 to 3.0 percent. This represents the lowest global growth in approximately two decades, outside of 2020, the year of the pandemic.

A natural question is: if trade tensions and uncertainty persist, what could be the impact on global growth?

To start, we know that uncertainty imposes huge costs. With complex modern supply chains and changing bilateral tariff rates, planning becomes very difficult. Businesses postpone shipping and investment decisions. We also know that the longer uncertainty persists, the larger the costs imposed.

In addition, rising trade barriers hit growth upfront. Tariffs do raise fiscal revenues but come at the expense of reducing and shifting economic activity—and evidence from past episodes suggests higher tariff rates are not paid by trading partners alone. These costs are passed on to importers and, ultimately, to consumers who pay higher prices.

Protectionism also erodes productivity over the long run, especially in smaller economies. Shielding industries from competition reduces incentives for efficient resource allocation. Past productivity and competitiveness gains from trade are given up, which hurts innovation.

Tariffs will impact economic growth differently across countries, but no nation is immune. The IMF’s most significant downgrades to growth are concentrated in countries affected the most by recent trade measures. Low-income countries face the added challenge of falling aid flows, as donor countries reprioritize resources to deal with domestic concerns.

And we have already seen an increase in global financial market volatility. Equity market valuations declined sharply in response to the April tariff announcements. Unusual movements in the US government bond and currency markets followed.

Equity markets have since regained ground on the hopes of a swift resolution of trade tensions. But with continued uncertainty and tighter financial conditions, we assessed in our most recent Global Financial Stability Report that risks to global financial stability have increased significantly.

These global realities result in three main vulnerabilities.

First, valuations remain high in some key segments of global equity and corporate bond markets. If the economic outlook worsens, these assets are vulnerable to sharp adjustments. This could, in turn, affect emerging markets’ currencies, asset prices, and capital flows.

Second, in more volatile markets, some financial institutions could come under strain, especially highly leveraged nonbank financial institutions, with implications for the interconnected financial system.

Third, sovereign bond markets are vulnerable to further turbulence, especially where government debt levels are high. Emerging market economies—which already face the highest real financing costs in a decade—may now need to refinance their debt and finance fiscal spending at even higher costs.

 

These vulnerabilities, and the potential for impact in emerging economies, should not be underestimated nor ignored.

But let me step back from these most recent economic and financial developments. As I mentioned, global growth prospects were already underwhelming.

And looking over the medium term, these global growth prospects, as I mentioned previously, remain at their lowest levels in decades.

What is driving this? Our analysis shows that a significant and broad-based slowdown in productivity growth accounts for more than half of the decline in global growth.

This is partly because global labor and capital have not been flowing to the most dynamic firms. Lower private investment after the Global Financial Crisis and slower working-age-population growth in major economies exacerbated the problem. Our studies show that, without a course correction, global growth rates by the end of this decade would be below the pre-pandemic average by about 1 percentage point.

Simply put, new uncertainties on top of already weak economic prospects make for a very challenging global growth backdrop.

The Caribbean Growth and Resilience Challenge

It is not surprising, then, that most Caribbean countries also face a challenging outlook.

In our latest World Economic Outlook, we already projected tepid growth in the Caribbean region overall—even before accounting for the US trade policy announcements. Stronger performance in some countries—such as Jamaica and Trinidad and Tobago—was offset by slower growth in others.

And in several countries, crime weighs on growth prospects. Particularly in Haiti, where the security situation hampers efforts to sustain economic activity, implement reforms, and attract aid and foreign direct investment.

On top of that, we estimate that the April tariff announcement and its global spillovers would lower Caribbean regional growth by at least 0.2 percentage point on average.

But the impact varies across countries.

In tourism-dependent economies, where growth is closely tied to US economic activity, the impact will mainly depend on the size of the US tourist base (Figure).

In oil-exporting countries, lower commodity prices and higher volatility are the main channels of transmission. Lower global growth means lower demand for these commodities which adversely impacts the economies of commodity exporting countries.

Slower growth, while a relatively recent phenomena from a global perspective, is, unfortunately, not new to the Caribbean. Declining growth trends in the Caribbean region have loomed over the longer horizon as well. Recent IMF analysis finds that most Caribbean countries had significantly slower growth over the last decades: 2001–2023, as compared with the previous two decades: 1980–2000 (Figure).

For tourism-dependent Caribbean economies, we estimate a decline in potential growth from 3.3 percent over the 1981 – 2000 period to 1.6 percent over the following two decades, 2001-2019.

This presents the Caribbean with an aggravated challenge – to reverse the trend of slower growth at a time when global growth is also declining. That is, the challenge is to reverse the trend of slower growth when the wind in the proverbial sail is weaker and has changed direction.

Let’s be clear about what is at stake.

Slower growth in the Caribbean slows the improvement in living standards and stymies the aspirations of Caribbean people for better opportunities. Slowing growth, in the past, has also meant that convergence in income levels between the Caribbean and advanced economies has stalled. In other words, the gap between the economic fortunes of the Caribbean national and that of her counterpart in the advanced world is growing wider.

 

Of course, there are exceptions to the regional trend. In particular, Guyana’s economy has grown rapidly over the past two decades, progressing from low-middle-income to high-income status. Growth accelerated to over 45 percent on average in the past three years, making Guyana the fastest growing economy in the world!

But for the Caribbean more broadly, the questions on which we should focus is – what explains the pattern of declining growth? And, what is the appropriate menu of policy responses to this pattern?

With respect to the first question, and as in the rest of the world, a key explanation for declining growth is weak productivity growth.

The growth challenge is not a mystery. Growth potential can be decomposed into its constituent factors and we can compare how the Caribbean’s growth potential has declined over time. Such an analytical and data-driven approach reveals that the Caribbean’s growth potential is a half of what it was a few decades ago. Addressing the Caribbean growth challenge requires systematic and comprehensive policies to strategically improve the factors that contribute to growth potential. Zooming in on one of the important factors: the Caribbean’s productivity growth has declined to almost zero. This is at the root of the Caribbean’s growth challenge. In addition to productivity growth, physical and human capital development need to be accelerated. So, ladies and gentlemen, there is no magic solution to the Caribbean growth challenge. There is no quick fix either. In fact, great danger exists if we believe that the growth challenge can be addressed with quick fixes. Solving the growth question will require as much effort as the effort put into the macro stability reforms successfully undertaken in Jamaica, Barbados and Suriname.

What Should Policymakers Do? – Maintain and Entrench Macro Stability

The goal for policymakers is clear: to foster resilient and inclusive growth that sustainably raises living standards.

How should this be achieved?

1. Maintain and entrench macro-economic stability and
2. Decisively and comprehensively address the factors that raise growth potential

As a pre-requisite, countries should strive to pursue policies that restore, maintain and entrench macroeconomic stability – stable prices, sustainable fiscal trajectories, adequate foreign exchange reserves and financial sector stability.

The collective Caribbean experience powerfully demonstrates the transformative potential of macroeconomic stability. Jamaica, for example, which was burdened with unemployment rates that averaged 20% between the early 1970’s and the end of the 1980’s and 15% between over the 1990’s to the mid 2000’s only achieved the previously unimaginable result of low single digit unemployment rates, in the region of 4% and lower, when stability became entrenched.

Stability is also a friend to the poor as Jamaica’s experience also highlights.

Jamaica achieved the lowest rate of poverty in its history in 2023, again on the back of entrenched macroeconomic stability in the context of an institutionalized social protection framework supplemented by temporary and targeted counter-cyclical measures at times of distress.

Friends, our history and global economic history clearly demonstrate that economic stability is indispensable to national success, regardless of chosen social and political organization. Economic stability should therefore be guarded and protected as a national asset, allowing for focus on higher order challenges like structural reforms to unlock growth potential. Also, the requirements of stability should act as a constraint on policy. Any proposed policy action that has the prospect of jeopardizing any of the components of stability should not make it through the policy formation gauntlet. Securing economic stability into the future requires laws but laws are insufficient. Stability over the long term is best preserved by developing, empowering, and strengthening institutions.

Build fiscal buffers, strengthen fiscal frameworks, and bolster resilience.

The Caribbean region hosts different currency regimes. The key requirement is internal consistency within the chosen currency regime. Floating rate and fixed rate currency regimes impose their own constraints. These need to be observed for success.

While there is always room for improvement in monetary frameworks, the areas within the macro stability complex, that require urgent attention in the Caribbean, are rebuilding fiscal buffers, strengthening fiscal frameworks and bolstering resilience.

Let’s face it: on top of all the other challenges, government budgets in the region are strapped. Providing extraordinary support in response to extraordinary shocks has depleted buffers.

Public debt ratios have come down since the pandemic—this is good news. However, in many countries—including Caribbean countries—debt and financing needs are still too high.

In fact, for some Eastern Caribbean Currency Union (ECCU) members, achieving their regional debt target of 60 percent of GDP by 2035, a full decade from now, will require sizeable efforts.

With timely fiscal consolidation, countries can bring down debt ratios and by so doing, they can protect themselves against future shocks. And they can make space to invest in crucial human and physical capital—an investment in their own future.

In addition, some Caribbean countries have pegged exchange rates, which have been a long-standing anchor of stability—for example, in the Eastern Caribbean. The ECCU is one of only four currency unions in the entire world^[1] and stands as a testimony to the capacity of Caribbean people to collaborate, cooperate and innovate.

However, to safeguard the stability provided by this currency union long into the future, fiscal policies must be sustainable, resilient, and consistent with the exchange rate regime. Inconsistency only serves to compromise the currency union with the potential for destabilizing consequences.

Our advice to policymakers on how to rebuild buffers and strengthen frameworks is straightforward: mobilize tax revenue, spend wisely, and plan ahead.

Let’s start with mobilizing tax revenue. The tax revenue yield in Eastern Caribbean countries is falling short of peers. Inefficient tax exemptions and weak tax administrations are leading to large revenue losses.

Broadening the tax base and removing distortions will not only increase revenues but also support investment and growth. The Fund has provided technical assistance to our members in the Caribbean to support their ongoing efforts in this area.

Let me turn to spending wisely. Not all spending is productive spending. With limited fiscal space focus must be on spending that has the potential to deliver quantifiable social and economic returns within reasonable timeframes. Policymakers should keep the quality and composition of spending under review, including by containing unproductive spending, enhancing efficiency, and digitalizing government services.

Finally, plan ahead. With conviction. Credibility is critical to allow fiscal consolidation to proceed gradually with lower financing costs and better growth results.

Strong medium-term fiscal frameworks, with well-designed fiscal rules and specific plans for fiscal policies and reforms, can help bring debt down and investment up.

Frameworks that combine debt and operational targets—and are backed by adequate capacity and institutions—can be particularly powerful.

This approach worked well in Jamaica, where fiscal responsibility was written into law under the Financial Administration and Audit Act. The Act established a public debt goal of 60 percent of GDP and a rule that determines the annual target fiscal balance consistent with that objective. An Independent Fiscal Commission is the arbiter of Jamaica’s fiscal rules and provides an opinion on fiscal policy sustainability, strengthening credibility and accountability.

Planning ahead also means being ready for the certainty of economic shocks. A golden rule in policymaking in a country is to design policies that fit the country’s circumstances. Shocks are a permanent feature of Caribbean small state reality. Caribbean economic policy ought, therefore, to make provisions for the inevitability of economic shocks. In Jamaica’s Act, there are clear escape clauses for large shocks and an automatic adjustment mechanism to secure a return to the debt target.

Well-designed and transparent sovereign wealth funds can also help stabilize public finances when shocks hit. For example, Trinidad and Tobago’s sovereign wealth fund insulates fiscal policy from oil price fluctuations. Guyana’s fund helps manage its natural resource revenues, finance investment, and save for the future. And St. Kitts and Nevis is considering a fund to smooth volatile revenues from the Citizenship-by-Investment program.

Planning for shocks is ever more important in regions like the Caribbean that face recurrent threats from natural disasters.

Our countries need to be prepared before disasters hit.

Recurring natural disasters impair productive infrastructure and hinder human development, constraining productivity growth even further.

Major natural disasters cost an average of 2 percent of GDP per year in Caribbean countries and close to 4 percent of GDP in the Eastern Caribbean countries.

There is a physical dimension to disaster preparedness, which involves investing in resilient infrastructure.

There is also a financial dimension, which involves developing resilient risk transfer, contingent claim and insurance mechanisms.

Unfortunately, rising global private re-insurance premiums are making the task even harder. Domestic insurance premiums have also been rising. The result is lower insurance coverage in the private sector, and thus potentially more burden on governments when a natural disaster strikes.

Caribbean countries can secure a comprehensive insurance framework with multiple layers: self-insurance through their own fiscal buffers, participation in pooled risk transfer arrangements, contingent financing and catastrophe bonds.

With respect to the first layer, in Jamaica, there is a legislated requirement to save annually in a natural disaster fund. I recognize, however, that for some countries individual buffers have declined since the pandemic and need to be restored.

On the second layer, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) helps fill an important gap. Coverage has steadily improved since its inception, and the CCRIF has made prompt payouts after various natural disasters. This included US$85 million across five countries, Grenada, St Vincent & the Grenadines, Trinidad and Tobago, the Cayman Islands and Jamaica, in a matter of days after Hurricane Beryl, underscoring the Facility’s regional importance. Further expanding coverage would pay off in the long term.

On the third layer of contingent financing, the World Bank has approved catastrophe deferred drawdown options for Barbados, Dominica, Grenada, Jamaica, St. Lucia, St. Vincent and the Grenadines, among other countries in the pipeline. Furthermore, Grenada and St. Vincent and the Grenadines have already drawn on these instruments following natural disasters.

In addition, the IDB has credit contingent facilities with Antigua and Barbuda, the Bahamas, Barbados, Jamaica, St Vincent and the Grenadines among other countries.

On the fourth layer, Jamaica has, with World Bank assistance, independently sponsored two catastrophe bonds.

Now, to be clear, stability, resilience and risk transfer by themselves, do not automatically deliver the elevated growth needed. However, elevated levels of economic growth cannot be achieved without stability. Furthermore, stability and resilience set the stage for elongating the economic cycle by significantly lowering a country’s risk premium, lowering the cost of capital, expanding the frontier of project economic viability and providing the counter-cyclical capacity to respond to shocks, thereby limiting the duration and intensity of downturns, and providing for longer unbroken periods of consecutive economic growth. The Jamaican experience demonstrates these relationships.

To achieve higher growth, in addition to stability, policymakers have to decisively address factors that elevate growth potential beginning with the productivity gap.

Decisively address structural obstacles to lift firm level productivity

Addressing the growth challenge requires reversing the decline in the Caribbean’s growth potential by 1) improving total factor productivity and 2) boosting investment in physical and human capital.

Our analysis for the ECCU shows that the bulk of total factor productivity losses come from high costs of finance, cumbersome tax administration, inefficient business licensing and permits, and skills mismatches in the workforce. From my experience, this can also be applied to most of the Caribbean beyond the ECCU.

Overcoming these obstacles could bring substantial productivity gains ranging from 34 to 65 percent— which would be an incredible result! This could close the gap in income per capita with the US by 9 to 27 percentage points.

Simplify and Digitalize Regulation, Business Licensing, Permits and Tax Payment Procedures

One practical step is to promote digitalization of Caribbean societies which can significantly boost productivity. This will require a multifaceted strategy including investment in digital infrastructure, digital transformation of government, reducing the cost and increasing the availability of data transmission, improving digital literacy, among other factors.

Application of digital tools and digital technologies to improve access to government services, while reducing time, ought to be seen as a non-negotiable imperative. As an obvious example, further enhancing taxpayer access to digital government services—through e-payment, e-filing, and e-registration—would not only reduce the administrative burden but also encourage compliance, fostering a better environment for entrepreneurship.

In much of the Caribbean, businesses have to navigate a complex labyrinth of licensing, permitting and regulatory regimes. This is a drag on productivity. While the largest enterprises have the scale to absorb the inefficiencies, smaller firms suffocate from overly burdensome processes. We know that the economic vitality of a country is linked to the level of hospitability of the business environment to its small and medium-sized firms.

There is, therefore, tremendous scope in the region to greatly simplify regulatory processes and eliminate unnecessary steps. Furthermore, the digitalization of licensing, permitting and regulatory procedures promises to enhance the efficiency of firms, boosting productivity.

Improving Access to Finance

That leads me to another practical step: improving access to finance, which can encourage new businesses and support a transition into the more productive formal sector. Finance is the oxygen of business, and its affordable and widespread availability is essential for having a dynamic business environment.

There could be an entire session on improving access to finance as it is so fundamental, yet so multifaceted and complex.

Many factors hinder access to finance in the Caribbean. I will touch on a few.

First, legacy weaknesses in banks’ balance sheets limit access to credit, investment, and growth across the region. So it is important to address vulnerabilities in the banking sector. This includes timely compliance with regulatory standards and easier ways to dispose of impaired assets. Progress is happening: banks are building buffers and reducing non-performing loan ratios. But more work is needed to ensure all banks meet regulatory minimums.

Reducing the costs of non-performing loan resolutions, ultimately reduces the cost of loans. This can be achieved by modernizing insolvency regimes to encourage faster out-of-court debt workouts. Asset management companies—if they are properly funded—would facilitate asset disposals.

Collateral infrastructure should also be strengthened through effective credit registries and partial credit guarantee schemes. For example, the recently created regional credit bureau in the Eastern Caribbean can help lower the cost and time of credit risk assessments and close information asymmetry gaps. This will help small and medium enterprises access credit while safeguarding credit quality.

Stronger anti-money laundering and anti-terrorism financing frameworks can help protect the financial system from external threats and retain correspondent banking relationships, the absence of which impedes access to credit.

The above financial sector measures are absolutely necessary but hardly revolutionary.

Revolutionizing access to credit in the region could be achieved by enabling mobile real-time, instant, 24/7 payment system platforms as exist in India through their Unified Payments Interface (UPI) and right here in Brazil through Pix.

In both India and Brazil, access to finance and to financial services have been transformed, and inclusiveness expanded, by these innovations. Transactions are free, or ultra-low cost, and these payment platforms are integrated into banking apps and into e-commerce platforms.

Of course, these systems only exist within the context of national identification systems that provide the necessary identity verifications as required.

Seize the Opportunities from the Renewable Energy Transition.

The use of oil imports for electricity generation is costly and has led to very high electricity prices which undermines competitiveness—particularly for the tourism industry—at the expense of potential growth.

As we explored last December in the Caribbean Forum in Barbados, a successful energy transition can foster inclusive, sustainable, and resilient growth.

That transition will look different for energy-importing and energy-exporting countries.

For energy importers, diversifying into renewable energy, with fast declining costs, can reduce reliance on expensive and volatile oil imports. It would also offer relief from some of the highest electricity costs in the world. Consider this key fact: electricity in many countries in the Caribbean costs, a minimum of, twice as much as in advanced economies. We have been discussing this in the region for a long time. Too long.

The energy transition would enhance external sustainability for energy importers, while making them more competitive, more resilient to shocks, and more likely to grow faster and on a sustainable basis.

But seizing these opportunities requires tackling key obstacles. For example, high upfront investment costs. Limited fiscal space. Regulatory hurdles for private investment. And small market sizes and isolated grids that hinder economies of scale.

So, the transition to renewables will take time and investment. It will also take efforts coordinated on a regional scale.

One immediate, cost-effective step is to implement energy efficiency measures. For example, both Barbados and Jamaica have retrofitted government buildings with energy-efficient equipment. This delivers quick savings, typically without large upfront costs.

On the regional front, initiatives like the Resilient Renewable Energy Infrastructure Investment Facility—championed by the Eastern Caribbean Central Bank and supported by the World Bank—offer a promising step forward.

Regional mechanisms to promote pooled procurement and to harmonize regulatory frameworks will also be key.

Energy exporters in the Caribbean face a different set of challenges. Most notably, they have the difficult task of managing changes in fossil fuel demand and fiscal revenues while maximizing the value of existing reserves.

But the energy transition is also an opportunity to diversify into the green energy sectors of the future, such as green petrochemicals and green hydrogen.

Energy exporters will also need to watch out for spillovers from other regions’ climate policies, such as border carbon adjustment mechanisms. For example, Trinidad and Tobago faces exposure to the EU Carbon Border Adjustment Mechanism, which could, potentially, affect over 5 percent of the country’s total exports. And a further 5 percent is at risk if the EU expands its Mechanism.

But energy exporting countries can also turn this type of spillover into an advantage. By introducing their own carbon pricing systems, they can retain revenue in their economies rather than have it collected by their trading partners.

Invest in Human Capital, Bridge the Skills Gap and Invest in Physical Infrastructure

The most important investment Caribbean countries can make is in boosting the human capital of the region. Human capital development is multifaceted, but today I will focus on the central elements of education and skills.

Invest in Human Capital; Address the Skills Gap

Given the small size of Caribbean economies, and the absence of economies of scale, economic success will be determined by the level and quality of human capital in the region.

Elevated levels of economic growth will require substantial improvements in education and skills outcomes across the region, and in some countries more than others. This is deserving of the region’s energy and focus.

A recent survey for the ECCU highlights a shortage of skilled labor as a key constraint for businesses. I know this skills gap is also a reality in Jamaica and can be generalized across much of the Caribbean.

What can be done? The answer is twofold: enhance the skills of those employed and provide opportunities to those who have skills but are not in the labor market.

Expanding vocational training and modernizing education systems, coupled with active labor market policies, can help mitigate the skills gap. And digital tools can connect employers with potential employees.

Emerging technologies—such as artificial intelligence—make closing the skills gap all the more important. The opportunity is that rapidly evolving technologies could bring high productivity gains, with the threat that failure to upgrade skills could expose industries important to the region such as business process outsourcing.

Harnessing that potential in Caribbean countries includes, for instance, integrating AI and data science into all levels of education.

The good news is that many countries in the region are facing the skills challenge head on.

For example, my home country of Jamaica launched a national initiative—supported by the World Bank—for secondary school students in the areas of Science, Technology, Engineering, Arts, and Mathematics, also known as the STEAM initiative.

In Barbados, the 2022 Economic Recovery and Transformation Plan aims to enhance the business environment by advancing digitalization and skills training.

In St. Vincent and the Grenadines, an ongoing education reform is focused on modernizing and expanding post-secondary technical and vocational education to better align skills with labor market needs.

And in Antigua and Barbuda, the planned expansion of the University of the West Indies Five Islands Campus will provide new opportunities for higher education and regional talent development.

However more can be done, and should be done, in each of these countries. The goal of policy should be to have Caribbean schools rank in the upper quartile of the Program for International Student Assessment (PISA) benchmarks.

On creating more opportunities, bringing more women into the labor market can contribute to economic growth.

We estimate that eliminating the gender gap in the ECCU—which is over 11 percentage points, on average—could boost regional GDP by roughly 10 percent. That is a powerful economic case for inclusive labor policies, such as enhanced access to childcare and elderly care.

It is also imperative to foster opportunities for youth. Caribbean countries have some of the highest youth unemployment rates in the world, ranging from 10 to 40 percent. Empowering future generations is at the core of addressing the growth and resilience challenge in the region.

I want to acknowledge the important efforts led by the Caribbean Community, CARICOM, to work towards deeper social and economic integration.

Earlier this year, we saw tangible progress. CARICOM members are working to enable free movement of CARICOM nationals for willing countries. Importantly, this initiative also includes access to primary and secondary education, emergency healthcare, and primary healthcare for migrating individuals.

Boost Investment in Infrastructure

Improved infrastructure enhances the productivity of capital as well as the productivity of labor. The Caribbean will need much higher levels of investment to restore and boost its growth potential.

Workers depend on public transportation to get from home to work and back home again. If this, for example, routinely takes an hour and a half each way, on average, and costs a third of weekly wages, then labor productivity will suffer. Efficient, affordable, accessible mass transportation enhances productivity. While taxis complement bus transportation, they cannot be an effective substitute. This is more of a problem in larger Caribbean territories and I know that Jamaica is tackling this problem head-on.

Similarly, road and highway connectivity that opens new investment opportunities and reduces the cost of transportation of people and goods enhances productivity of capital as well as the productivity of labor and enhances growth potential.

Modern commerce relies on communication and, importantly, on data. I mentioned this earlier. There is scope for telecommunications and broadband infrastructure to be improved, for data costs to be lowered, and for data access to be expanded. This will require investment. Hopefully, private investment, but investment that will need to be facilitated by government policy.

Water is the source of life. Without water, communities are less productive, and businesses cannot function. Across the region, significant investment in water treatment, storage, and distribution infrastructure will be required to support economic growth and improve standards of living over the medium term.

All of these elements of infrastructure – transportation, broadband, roads, water, and energy, dealt with earlier, – need considerable investment to keep Caribbean societies competitive and to raise the growth potential.

However, Caribbean governments will not have the required resources to finance these investments from tax revenues, and at the same time fund education, health, security and other essential services.

As such, governments will need to consider attracting local, regional, and international private capital in well-structured transactions to finance the productivity enhancing infrastructure needs of the region.

This can be accomplished through the variety of Public Private Partnerships (PPP) modalities that exist and with the advice of multilateral partners, such as the International Finance Corporation (IFC) and the Inter-American Development Bank (IDB) who are very experienced in structuring these kinds of transactions, and who know what is required to generate investor interest.

I can speak from experience – the IFC has been instrumental in assisting Jamaica to develop its pipeline of PPP’s.

My advice however is to not develop PPP’s sequentially, one at a time, starting one as the other concludes. Given the preparation period required for each, sequential PPP development will take too long. Instead, pursue PPP’s using a programmatic approach. That is, develop a pipeline of infrastructure PPP’s in parallel so you can bring these to market in rapid succession. The time and resources required for investors to familiarize themselves with the macro-environment, the legislative framework, the regulatory architecture, the country risks etc., with uncertainty around bid success, needs to be amortized over a number of transactions – in order to attract deep pocketed and experienced investors prepared to provide competitive bids.

Open, transparent and competitive PPP’s, that are well structured, can help bridge the infrastructure gap and boost productivity.

The Role of the IMF

These are not easy times, and these are not easy steps to take. They require clarity of vision, coordination, partnerships, technical expertise and lots of energy.

But these steps can put Caribbean countries on a path toward greater growth and resilience.

Rest assured that the IMF remains fully committed to supporting our members across the region.

Our near-universal membership provides us with a unique global perspective and we are informed by a large range of cross-country experiences over the last 80 years.

With 191 member countries the IMF, as compared to the United Nations with 192 member countries, is as global as it gets. We engage with each of our members on a country-by-country basis, as well as on a regional basis with currency unions, including the Eastern Caribbean Currency Union.

Our member countries, including Caribbean states, are shareholders and owners of the IMF. We work for you. And we do so through three primary modalities – (i) surveillance, where we provide a review and analysis of our member countries’ economy on an annual or biennial basis. This review, called the Article IV Consultation report, named after the clause in our articles that mandates this exercise, is a principal obligation of IMF membership. This review, which contains country specific policy advice, is published, and freely available, online. I encourage media practitioners, economists, financial analysts, public policy advocates, and citizens interested in their country and region to access these Article IV reports for your country and make good use of the information and analysis contained therein.

The second modality through which the IMF provides a service to its member countries is capacity development. Here we provide technical analysis and tailor-made policy advice on specific issues that countries may be grappling with. For example, designing of tax policy measures, improving efficiency in public spending, optimizing public debt management, bolstering the capacity of statistics agencies and the development of monetary policy tools to name a few. Under this modality we also provide training courses for public officials through regional institutions such as CARTAC and also in courses at the IMF’s headquarters in Washington, DC.

Our third modality is the one that most are familiar with – the IMF provides financing designed to address balance of payments challenges. Our long-established lending toolkit helps countries restore macroeconomic stability. In this goal of restoring macroeconomic stability many countries have had successful engagements with the IMF. In the region, Jamaica, Barbados, and Suriname come immediately to mind.

At the recent IMF Spring Meetings I moderated a panel where the Greek Finance Minister made the point that at this juncture of very challenging fiscal circumstances in the Eurozone, only six countries within the 27 member EU have fiscal surpluses, and it so happens that four of these had IMF programs during the Global Financial Crisis.

And the IMF continues to evolve to meet the needs of our member countries. Our rapid facilities provide emergency financing when shocks hit. And our newer Resilience and Sustainability Facility provides affordable long-term financing to support resilience-building efforts.

In the Caribbean, Barbados and Suriname have made great strides in positioning their economies for growth while reducing vulnerabilities under their economic programs supported by the Extended Fund Facility. These countries’ ownership of the reforms has been critical to their success.

Jamaica had access to—but did not draw on—the Fund’s Precautionary and Liquidity Line, which provided an insurance buffer against external shocks. It supported efforts to keep the economy growing, reduce public debt, enhance financial frameworks, and upgrade macroeconomic data.

The Fund also provided rapid financing to seven Caribbean member countries during the pandemic.

And Barbados and Jamaica have benefitted from the Resilience and Sustainability Facility. Reforms have helped integrate climate-related risks in macroeconomic frameworks, provide incentives for renewable energy to support growth, and catalyze financing for investment in resilience.

We are also engaging closely with Haiti through a Staff-Monitored Program. This Program is designed to support the authorities’ economic policy objectives and build a track record of reform implementation, which could pave the way for financial assistance from the Fund.

Of course, the effectiveness of our advice and financial support is enhanced by our continued efforts in capacity development. In particular, I would like to highlight the work of CARTAC, which has been operating since 2001.

CARTAC offers capacity building and policy advice to our Caribbean members across several areas: from public finance management, to tax and customs administration, to financial sector supervision and financial stability, and beyond.

We greatly appreciate the generous support received so far for CARTAC. But more is needed to close the financing gap. I hope we can count on your advocacy with development partners to sustain CARTAC’s essential work.

In my time at the Fund thus far, I have seen how much advanced countries rely on, and use, the IMF’s intellectual output to the benefit of their countries and how this output features in, and informs, public discourse in many member countries. The IMF is an incredibly powerful resource that works for you and I strongly encourage Caribbean countries to strategically maximize their use of the IMF and what it has to offer.

A Call to Action

Let me conclude.

Policymakers in the Caribbean are facing a complex set of old and new challenges.

But challenging times can also be times of opportunity, action, and resolve.

The Caribbean is a region of immense promise, with rich cultural heritage, natural beauty, and vibrant population.

The world is undergoing profound change. This change introduces global vulnerabilities to which the Caribbean is not immune. The resilience of small open economies like those in the Caribbean is likely to be tested.

It is imperative, therefore, that Caribbean countries work to put their macro-fiscal houses in order while engaging in deep and meaningful structural reforms to increase the growth potential of Caribbean economies.

You hold the keys to the future of the region. You have the tools, the talent, and the tenacity to chart a new path for growth and resilience. Your actions can make a difference to the Caribbean’s prospects.

We have seen many steps in the right direction to address bottlenecks and boost productivity. And we encourage you to keep going.

Implement those reforms that are under your control.

Continue to work together across the region.

Capitalize on CARICOM to achieve a larger market for the movement of people, investment, and trade.

Stay focused on the goal: delivering more economic resilience, higher growth prospects, and better living standards for people across the Caribbean.

And, you can count on the Fund along the way.

Thank you.

---

[1] The other currency unions are: Economic Community of Central African States (CEMAC); West African Economic and Monetary Union (WAEMU); and the European Economic and Monetary Union (EMU).

https://www.imf.org/en/News/Articles/2025/06/10/dmd-clarke-cdb-speech-june-10

MIL OSI

Source: IMF – News in Russian

June 10, 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.

• The Nepali authorities and the IMF team have reached staff-level agreement to conclude the sixth review of Nepal’s economic reform program supported by the IMF’s Extended Credit Facility (ECF) arrangement. Once the review is approved by IMF Management and completed by the IMF Executive Board, Nepal will have access to about $42.7 million in financing.
• The growth recovery is expected to gather pace in FY2025/26 underpinned by policy measures announced in the budget aimed at improving project execution and boosting private sector confidence, while lending rates remain accommodative. However, timely and full execution of budget spending is important to durably strengthen economic growth.
• Completion of the sixth review by the IMF’s Executive Board will require completing a prior action relating to further progress with the loan portfolio review.

Washington, DC: An International Monetary Fund (IMF) team led by Ms. Sarwat Jahan visited Kathmandu during May 26 to June 10, 2025. After constructive discussions, Ms. Jahan issued the following statement at the end of the mission: “The Nepali authorities and IMF staff reached staff-level agreement on the policies and reforms needed to complete the sixth review under the ECF (see Press Release No. 22/6)[1]. The agreement is subject to approval by the IMF’s Executive Board. Upon completion of the Executive Board Review Nepal would have access to SDR 31.4 million (about US$42.7 million), bringing the total IMF financial support disbursed under the ECF to SDR 251.1 million (about US$331.8 million), from a total of SDR 282.4 million.

“Nepal continues to make progress with the implementation of the ECF-supported program. Program performance has been satisfactory, with all quantitative performance metrics for mid‑January 2025 met except for the indicative target on child welfare grants. The implementation of structural benchmarks has gained momentum while reforms in some areas are still ongoing. Key reforms that have been completed or are on-track to be completed soon as part of the sixth review include completion of a tax expenditure report, publication of revised National Project Bank guidelines, and finalization of a post-Loan Portfolio Review (LPR) roadmap. Significant progress was made on bringing key recommendations from the IMF’s 2021 Safeguard Assessment and 2023 Financial Sector Stability Report into draft Nepal Rastra Bank (NRB) Act amendments in preparation for submission to Parliament. The NRB remains committed to completing the LPR and is finalizing the selection of the independent international consultant to assist with the LPR. The completion of the sixth review by the IMF’s Executive Board is contingent on NRB making further progress with the loan portfolio review.

“Domestically, economic activity has continued to gradually recover, underpinned by a rebound in construction and manufacturing, continued expansion of hydropower capacity, and a good harvest that helped offset the impact of the September 2024 floods. Growth in FY2024/25 is estimated to exceed 4 percent, although still below potential. Inflation, which spiked temporarily following the floods, decelerated to 3.4 percent y/y in April 2025. The external position continued to strengthen, with robust growth in exports, remittances, and tourism receipts outpacing the recovery in imports.

“Financial sector vulnerabilities have not yet eased, with non‑performing loans (NPLs) increasing to 5.2 percent in April 2025, impacting bank capital. The financial health of the savings and credit cooperatives (SACCOs) remains challenging.

“Looking ahead, growth is projected to strengthen in FY2025/26, while inflation is expected to remain contained within the NRB’s tolerance level. However, the outlook is subject to important downside risks, including under-execution of capital projects, an increase in financial sector vulnerabilities, elevated global trade tensions and uncertainty, and potential disruptions to domestic policy continuity and reform implementation.

“Against this background, policies and reforms envisaged under the ECF-supported program remain well-placed to help preserve macroeconomic stability and strengthen Nepal’s policymaking framework. The FY2025/26 budget is broadly consistent with the program objective to maintain fiscal and debt sustainability, while initiating reforms to increase capital spending, providing further incentives to encourage private sector investment, and expanding the public school midday meal program.

“Monetary policy continues to follow a cautious data-driven approach, with maintaining focus on price and external stability a key to supporting growth. Amendments to the NRB Act would strengthen the central bank’s independence and governance and make the bank resolution regime more robust. Rising financial sector vulnerabilities warrant increased vigilance. In this context, it is essential to launch the LPR in a timely manner and prioritize measures to deal with problematic SACCOs. Creation of an Asset Management Company should be approached with extra caution given the risks involved and should be made conditional on improvements to the debt recovery framework, including the insolvency law, and a thorough review of the business case for such an entity. The authorities have continued to make tangible improvements to the anti-money laundering/countering the financing of terrorism (AML/CFT) legal framework, and are now shifting their focus to effective implementation of Nepal’s AML/CFT Action Plan.

“The IMF team held meetings with the Honorable Deputy Prime Minister and Finance Minister Mr. Bishnu Prasad Paudel, the National Planning Commission Vice-Chairman Honorable Dr. Shiva Raj Adhikari, the Nepal Rastra Bank Governor Dr. Biswo Nath Poudel, and other senior government and central bank officials. The IMF team also met with representatives from the private sector, think tank and development partners.”

“The IMF team is grateful to the Nepali authorities for their hospitality and for open and constructive discussions.”

[1] The Extended Credit Facility (ECF) provides financial assistance to countries with protracted balance of payments problems. It supports countries’ economic programs aimed at moving toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth. The ECF is expected to help catalyze additional foreign aid.

https://www.imf.org/en/News/Articles/2025/06/10/pr-25191-nepal-imf-reaches-agreement-on-6th-review-under-the-ecf

MIL OSI

Source: IMF – News in Russian

June 10, 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.

• Growth slowed in 2024 due to weak hydrocarbon exports. The main economic challenge is to translate hydrocarbon wealth into more diversified, sustainable, and inclusive growth.
• A more market-based strategy, reforms to the monetary and exchange rate frameworks, increased public spending efficiency, and enhanced governance and transparency would support the transition to a more diversified and robust economy.
• Further improvements in the availability, quality, and reliability of economic statistics would help inform policy makers and increase transparency and credibility.

Washington, DC: An International Monetary Fund (IMF) mission led by Ms. Anna Bordon visited Ashgabat during May 21-June 3, 2025. The purpose of the visit was to review the country’s economic landscape, including its financial developments, economic outlook, risks, and policies aimed at promoting diverse, inclusive, and sustainable growth. The mission met with senior government officials, representatives of the private and financial sectors, and the diplomatic community. At the end of the visit, Ms. Bordon issued the following statement: 

“Economic activity moderated in 2024, and inflation softened in recent months. IMF staff estimate that growth slowed to 3.0 percent in 2024 from 4.5 percent in 2023, owing to weak hydrocarbon exports. Inflation decelerated from 3.8 percent at end 2024 to 1.1 percent in March 2025 owing to a sharp slowdown in food inflation combined with deflation in non-food items and low inflation in services. Credit growth and monetary conditions have been tighter since the second half of 2023, while the parallel market exchange rate has remained broadly stable. The current account surplus narrowed from 5.9 percent of GDP in 2023 to 4.4 percent in 2024.

“Looking ahead the economy is expected to expand at around 2.3 percent in 2025 and over the medium term. Hydrocarbon exports growth is expected to be negative in 2025, but to gradually pick up to around 2 percent over the medium term while non-hydrocarbon growth is expected to remain subdued, given the challenging business environment, investment inefficiencies, significant real exchange rate overvaluation, and protectionism. Inflation is projected to pick up gradually over the medium term due to looser monetary conditions, returning to its recent historical average of 8 percent, which is primarily fueled by the long-standing policy of increasing public sector wages and pensions by 10 percent annually. The external position is projected to gradually deteriorate, shifting from a surplus to a deficit, driven by lower hydrocarbon prices, declining oil exports, and an overvalued currency. Rising wages are also expected to fuel import demand, further weakening the trade balance. Risks to the outlook remain tilted to the downside.

“The nonhydrocarbon primary balance improved in 2024, with higher revenues more than offsetting an increase in capital spending. Looking ahead, the deficit is anticipated to narrow further over the medium term, with capital spending expected to moderate. To leverage this positive trajectory, it is crucial for Turkmenistan to focus its spending on enhancing physical and human capital. This will require improving spending efficiency and public investment management, transitioning towards performance-based public wage increases, and reforming state-owned enterprises (SOEs).

“Strengthening fiscal reporting and public financial management (PFM) should be a top priority. Turkmenistan should expedite the implementation of medium-term budgeting, establishment of a single treasury account, and the expansion of fiscal reporting coverage. Reforming SOEs is also pivotal in managing fiscal risks, enhancing fiscal transparency, and fostering private sector development by reducing the state footprint.

“The Central Bank of Turkmenistan (CBT) should focus on price and financial stability. Until recently, the CBT had typically kept monetary policy loose to support the government’s long-term development objectives. Since the second half of 2023, however, CBT net lending to banks has slowed considerably, owing to SOE repayments. Going forward, commercial bank lending for development purposes, if needed, should be supported by the state budget, and not by the CBT. The CBT should also modernize its central bank operations and accelerate its efforts to strengthen financial regulation, supervision, and crisis management.

“Unifying the exchange rates would support Turkmenistan’s diversification objectives and reduce economic distortions and governance vulnerabilities. Turkmenistan should consider a significant upfront adjustment of the official exchange rate combined with sufficiently tight macroeconomic policies, a clear communication strategy, and enhanced social benefits to protect the most vulnerable. Post-adjustment, the devalued official exchange rate can remain the monetary anchor, with the CBT ready to provide FX to meet demand. Exchange restrictions on current international transactions should also be eliminated, to create a level-playing field, improve efficiency, and alleviate FX shortages. The adjustment measures and supporting reforms need to be sequenced carefully, while recognizing inherent uncertainties.

“Turkmenistan is adequately prioritizing economic diversification. A pre-requisite for diversification is macroeconomic stability, including as a core element the unification of the exchange rates and elimination of exchange restrictions. Moving away from a centrally planned economy will require continued efforts to liberalize prices and reduce the state footprint to allocate resources more efficiently. A more market-oriented economy will also require improving governance, skills, infrastructure, digitalization, and logistics while accelerating the efforts toward WTO accession.

“Further improvements in the availability, quality, and reliability of economic statistics would help inform policy makers and increase transparency and credibility.   

“The IMF team is grateful to the authorities and other stakeholders for their warm hospitality and insightful and candid discussions.”

Turkmenistan: Selected Economic and Financial Indicators, 2022–26
	Est.	Est.	Est.	Proj.	Proj.
	2022	2023	2024	2025	2026
Output and prices	(Annual percentage change)
Real GDP 1/	3.0	4.5	3.0	2.3	2.3
Real hydrocarbon GDP	-6.4	-0.6	-10.6	-2.6	1.8
Real nonhydrocarbon GDP	5.2	5.6	5.7	3.0	2.3
Consumer prices (end of period)	3.0	1.4	3.8	4.0	6.0
Consumer prices (period average)	11.2	-1.6	4.6	3.9	5.0
Investment and savings	(In percent of GDP)
Gross investment	18.2	17.0	16.0	13.0	12.9
Of which: State budget	0.5	0.9	1.6	0.7	0.7
Gross savings	27.9	22.9	20.4	15.1	13.3
Fiscal sector	(In percent of GDP)
Overall fiscal balance 2/	3.4	0.1	-0.1	0.3	-0.3
Revenue	16.4	13.8	14.4	14.1	13.7
Expenditure	13.0	13.7	14.5	13.8	14.1
Total public debt 3/	7.9	5.8	3.6	3.3	3.1
Monetary sector	(12-month percent change, unless otherwise indicated)
Credit to the economy 4/	8.2	0.3	2.2	5.4	5.9
Credit to GDP ratio	58.6	53.1	49.6	49.9	49.6
Broad money, incl. foreign currency deposits at CBT	-2.6	-2.5	10.1	5.3	6.7
External sector	(In percent of GDP, unless otherwise indicated)
Exports of goods (In millions of US$)	14,727	12,963	12,168	11,218	11,068
Imports of goods (In millions of US$)	7,188	7,401	7,665	8,407	9,085
Current account balance	9.7	5.9	4.4	2.1	0.4
Foreign direct investment	2.0	0.9	0.4	0.0	0.0
Total public sector external debt	7.9	5.8	3.6	3.3	3.1
Memorandum items:
Nominal GDP (in millions of manat)	198,371	219,848	240,363	251,884	268,110
Nominal GDP (in millions of US$)	56,677	62,814	68,675	71,967	76,603
Sources: Turkmen authorities; and Fund staff estimates and projections.
1/ Staff uses its own GDP estimates given that the narrative underlying the official GDP growth estimates is hard to reconcile with other available data. In particular, official GDP growth is extremely stable, despite shocks, including the pandemic.
2/ Excluding receipts from government bond issuance and privatization proceeds.
3/ Includes domestic state government debt and external public and publicly guaranteed debt.
4/ Including credit to SOEs.

https://www.imf.org/en/News/Articles/2025/06/10/pr-25190-turkmenistan-imf-completes-2025-article-iv-mission

MIL OSI

Source: IMF – News in Russian

June 10, 2025

• After a strong recovery in 2024, growth is expected to moderate in 2025, amid global and election-related uncertainty, and thereafter to remain close to potential. Inflation is expected to remain close to the midpoint of the target band. The financial system is sound. Risks are tilted to the downside given elevated external uncertainty, but Peru has ample buffers to cope with shocks.
• Meeting the 2025 fiscal deficit target would require additional efforts in a pre-election year. In the medium term, further fiscal consolidation measures should be identified to comply with the fiscal rule deficit targets and debt ceiling. Introducing both spending and revenue measures would make the consolidation more balanced and credible.
• Structural reforms are urgently required to lift potential growth, including updating the fiscal decentralization framework to help boost investments in the critical mineral sector. Enhanced efforts are needed to curb the low but rising level of insecurity, reform labor and tax regulations that impose excessive costs for formalizing or growing a business, enhance the independence and integrity of judicial bodies and tools to combat corruption impunity, build resilience to natural disasters, and embrace the opportunities of digital technologies and artificial intelligence.

Washington, DC: On June 5, 2025, the Executive Board of the International Monetary Fund (IMF) concluded the 2025 Article IV consultation[1] with Peru and endorsed the staff appraisal without a meeting on a lapse-of-time basis.[2]

The economy has recovered from consecutive natural disaster shocks and social turmoil. Inflation is firmly within the target band, owing to the central bank’s early and decisive monetary tightening followed by cautious easing. The financial sector remained sound and profitable. The current account surplus further improved, underpinned by strong terms of trade. However, the fiscal position weakened. A relative political stability persists but pre-election tensions are rising. Lingering political uncertainty weighs on economic prospects and dents the appetite for structural reforms to boost potential growth.

Growth is expected to moderate to 2.8 percent in 2025. A favorable momentum in private consumption and elevated public investment would support continued growth, but pre-election tensions would weigh on the private investment recovery while the impact of the first-round effects of the tariffs and global growth slowdown would be negative, although relatively moderate. Inflation is expected to remain within the target band of 1-3 percent. The current account balance is envisaged to remain in a surplus of 1.7 percent of GDP in 2025, with low external financing and debt rollover risks.

Evolving risks are dominated by the potential for larger adverse impacts on global growth and commodity prices, due to prolonged trade policy uncertainty and financial market volatility, but Peru has ample buffers to cope with shocks. In the short term, key domestic risks include an intensification of political uncertainty, social unrest over security concerns, and weather-related shocks. Key external risks include trade policy uncertainty, tighter financial conditions, and commodity price volatility. Recent government initiatives to accelerate private sector involvement in public investment projects and streamline burdensome regulations could help revive private investment. Peru’s macroeconomic resilience is reinforced by very strong buffers including low public debt, abundant international reserves, and access to international capital markets on favorable terms.

Executive Board Assessment

After a strong recovery, growth is expected to moderate, amid global policy uncertainty and pre-election tensions, and thereafter to remain close to potential. With a closed output gap and firmly anchored inflation expectations, headline inflation would remain within the target band. The current account balance is envisaged to remain in a surplus, only gradually returning to a deficit in the medium term—stabilizing at its norm, of about 1.5 percent of GDP—as private investment recovers and terms of trade normalize. The external position in 2024 was stronger than the level implied by medium-term fundamentals and desirable policies, due to strong terms of trade and a recovery in traditional exports. Risks are tilted to the downside given elevated external uncertainty, but Peru has ample buffers to cope with shocks. Very strong macroeconomic policies and institutional policy frameworks remain in place.

A broadly neutral monetary policy stance is appropriate. Inflation expectations are approaching 2 percent, and the output gap is closed. However, given heightened external uncertainty, monetary policy should remain data dependent. Continued exchange rate flexibility should be allowed to help cushion the impact of external shocks.

Meeting the 2025 fiscal deficit target will require additional efforts in a pre-election year. The 2025 budget envisages a deficit of 2.2 percent of GDP, consistent with the revised fiscal rule target. A tax revenue rebound from the economic recovery and one-off factors will help reduce the deficit in 2025, but additional efforts of about 0.4 percent of GDP will be needed to secure fiscal rule compliance. Additional spending control measures would make this year’s consolidation plans more credible and balanced. In May 2025, the authorities announced initiatives to improve spending efficiency, but further efforts will be needed to comply with this year’s target.

A combination of spending restraint and revenue-raising measures would be needed to comply with the medium-term fiscal targets. To comply with the fiscal rule deficit target of 1 percent of GDP by 2028 and the debt ceiling of 30 percent of GDP by 2035, the authorities’ medium-term consolidation plan envisages a reduction of current spending by about 0.4 percent of GDP per year between 2026 and 2028. Identifying both revenue and spending measures—including efforts to streamline tax expenditures; strengthen tax administration; and control wages, discretionary transfers, and inefficient public investment—would secure a balanced and gradual consolidation. In the absence of measures, public debt would gradually rise over the medium term, while remaining relatively low compared to peers. Legislative initiatives bearing fiscal costs, proposals that erode the tax base, and excessive reliance on private participation schemes would complicate the attainment of fiscal targets. Reforms to significantly reduce Petroperú’s costs and enhance its transparency and governance are also needed to safeguard fiscal credibility.

Systemic risks are limited, but authorities should continue to proactively contain financial vulnerabilities. Banks are profitable, with ample liquidity and capital buffers. While elevated for small- and medium-sized firms, NPLs are expected to continue improving and would support the growth of credit. The authorities should continue to be vigilant of pockets of vulnerability, particularly in corporate loans.

Focused macroprudential policies could reduce financial vulnerabilities from remaining dollarized credit. While the aggregate value of unhedged dollar credit is low, unhedged dollar credit tends to be riskier and concentrated in large- and medium-sized companies in the construction, commerce, and manufacturing sectors. The authorities’ regulation to introduce higher risk weighting in 2026 will help alleviate vulnerabilities from unhedged dollar credit. To ensure the stability of dollar funding for financial institutions, the authorities could consider introducing currency-specific NSFR requirements to complement the existing currency-specific LCR limits.

Policy efforts are needed to revive the domestic capital market. It is critical to maintain the prohibition of future pension withdrawals, as approved in the recent pension reform, to protect the functioning of the domestic capital market, decrease financing costs, and lower the risks of old-age poverty. Measures to broaden the investor base through retail investment products could play a significant role in attracting funds back into the securities market.

Financial resilience would be strengthened by addressing remaining regulatory gaps. The revised Basel III risk-weight framework and improving the activation criteria for the countercyclical capital buffer (CCyB) will help enhance the effectiveness of the entire regulatory framework. Completing the evaluation of recovery plans for domestic systemically important banks and expanding to the financial group level and their resolution planning will eliminate uncertainty under potential systemic events by facilitating orderly crisis management.

Updating the fiscal decentralization framework, along other needed structural reforms, could help boost investments in the critical mineral sector and increase potential growth. A US$64 billion pipeline of mining investment projects has been mostly stalled for many years due to bureaucratic complexity and social conflicts. Unlocking these projects and channeling the additional fiscal revenues could permanently boost potential growth. Updating the fiscal decentralization framework, including redesigning natural resource revenue-sharing formulas, to improve public spending efficiency and generate high-impact public investments could help ensure that mining dividends translate into greater development. Enhanced efforts are also needed to curb the low but rising level of insecurity, reform labor and tax regulations that impose excessive costs for formalizing or growing a business, enhance the independence and integrity of judicial bodies and tools to combat corruption impunity, build resilience to natural disasters, and embrace the opportunities of digital technologies and artificial intelligence. The OECD accession process provides a clear roadmap for other critical reforms to boost the business climate, reduce informality, and reform the civil service.

 

Peru: Selected Economic Indicators

2020 2021 2022 2023 2024 Proj. 2025 2026 2027 2028 2029 2030 Social Indicators Poverty rate (total) 1/ 30.1 25.9 27.5 29 27.6 … … … … … … Unemployment rate for Metropolitan Lima (average) 13 10.7 7.8 6.8 6.4 … … … … … … (Annual percentage change; unless otherwise indicated) Production and Prices Real GDP -10.9 13.4 2.8 -0.4 3.3 2.8 2.6 2.5 2.5 2.5 2.5 Output gap (percent of potential GDP) -5.5 0.8 0.7 -1.3 -0.4 0 0 0 0 0 0 Consumer prices (end of period) 2 6.4 8.5 3.2 2 2 2 2 2 2 2 Consumer prices (period average) 1.8 4 7.9 6.3 2.4 1.7 1.9 2 2 2 2 Money and Credit 2/ 3/ Broad money 29.2 2.7 -0.7 2.2 11.6 1.7 5.6 5.6 5.6 5.6 5.6 Net credit to the private sector 14 6.5 3.3 0.7 0.9 4.7 5.7 6 6 6 6 Credit-to-private-sector/GDP ratio (%) 52.4 45.9 44.4 41.8 38.9 38.9 39.3 39.8 40.4 40.9 41.5 External Sector                     Exports -10.7 47.4 4.8 2 12.4 5.8 3.1 1.9 3.2 3.2 2.7 Imports -15.5 38.2 16.7 -11 4.5 4.1 3.1 4.1 4.4 4.6 4.6 External current account balance (percent of GDP) 0.9 -2.1 -4.1 0.7 2.2 1.7 1.3 0.4 -0.1 -0.8 -1.5 Gross reserves In billions of U.S. dollars 74.9 78.5 72.2 71.3 79.2 84.2 88.7 92.7 96.4 100.4 104.9   Percent of short-term external debt 4/ 491 578 509 404 435 477 505 517 606 641 635   Percent of foreign currency deposits at    banks 222 229 209 204 213 220 219 217 213 210 208 (In percent of GDP; unless otherwise indicated) Public Sector                       NFPS revenue 21.8 25.5 27 23.9 22.7 23.6 23.1 23.1 23.2 23.3 23.4 NFPS primary expenditure 29.1 26.5 27.1 25.1 24.5 24.4 23.9 23.5 23.3 23.2 23.2 NFPS primary balance -7.3 -1 -0.1 -1.2 -1.8 -0.7 -0.8 -0.4 -0.1 0.1 0.2 NFPS overall balance -8.9 -2.5 -1.7 -2.8 -3.5 -2.6 -2.5 -2.2 -2 -1.8 -1.7 NFPS structural balance 5/ -7 -3.9 -2.2 -2.6 -3.7 -2.9 -2.9 -2.5 -2.2 -1.9 -1.8 NFPS structural primary balance 5/ -5.4 -2.4 -0.6 -0.9 -1.9 -1.1 -1.1 -0.6 -0.3 0 0.1 Debt                     Total external debt 6/ 43.7 46.3 42.7 40.3 38.5 35.7 33.8 31.6 30.1 28.8 27.4 Gross non-financial public sector debt 7/ 34.9 36.1 34 33 32.8 33.7 34.7 35.5 35.9 35.9 36 External 14.8 19.4 17.6 15.8 15.5 15.1 14.8 13.7 13 12.3 11.3 Domestic 20 16.7 16.4 17.1 17.3 18.5 19.9 21.8 23 23.6 24.6 Savings and Investment                     Gross domestic investment 18.3 20.8 21 17.7 18.1 17.9 18.1 18.7 19.1 19.5 19.8 Public sector (incl. repayment certificates) 4.3 4.7 5 5 5.3 5.2 4.9 4.9 4.9 4.9 4.9 Private sector 16.7 20.4 20.2 17.9 17.2 17.1 16.9 16.7 16.6 16.5 16.4 National savings 19.2 18.8 16.9 18.4 20.3 19.6 19.4 19.1 19 18.7 18.3 Public sector -3.9 2.8 4.3 3 2.4 3.6 3.2 3.5 3.7 3.9 4 Private sector 23.2 15.9 12.6 15.4 17.9 16 16.2 15.6 15.3 14.8 14.3 Memorandum Items                     Nominal GDP (S/. billion) 722 878 937 1,001 1,085 1,136 1,188 1,242 1,299 1,360 1,423 GDP per capita (in US$) 6,328 6,849 7,319 7,930 8,485 8,814 9,182 9,505 9,825 10,168 10,529 Sources: National authorities; UNDP Human Development Indicators; and IMF staff estimates/projections.   1/ Defined as the percentage of households with total spending below the cost of a basic consumption basket.  2/ Corresponds to depository corporations.  3/ Foreign currency stocks are valued at end-of-period exchange rates.  4/ Short-term debt is defined on a residual maturity basis and includes amortization of medium and long-term debt.  5/ Adjusted by the economic cycle and commodity prices, and for non-structural commodity revenue. The latter uses as equilibrium commodity prices, a moving average estimate that takes 5 years of historical prices and 3 years of forward prices according to the IMF’s World Economic Outlook.   6/ Includes local currency debt held by non-residents and excludes global bonds held by residents.  7/ Includes repayment certificates and government guaranteed debt.

[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 of discussion by the Executive Board.

[2] The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.

https://www.imf.org/en/News/Articles/2025/06/09/pr-25186-peru-imf-concludes-2025-art-iv-consultation

MIL OSI

Source: IMF – News in Russian

June 10, 2025

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

• An IMF staff team visited Syria for the first time since 2009, to assess the economic and financial conditions in Syria and discuss with the authorities their economic policy and capacity building priorities to support the recovery of the Syrian economy.
• Amidst enormous challenges, the Syrian authorities are determined to rehabilitate Syria’s economy. In the near term, it is critical to restore public confidence and macro-economic stability through the pursuit of sound fiscal and monetary policies and create conditions for the private sector to lead Syria’s development and growth.
• Syria will need substantial international assistance to support the authorities’ efforts to rehabilitate the economy, meet urgent humanitarian needs, and rebuild essential institutions and infrastructure. This not only includes concessional financial support, but also extensive capacity development assistance.

Damascus, Syria: A staff team from the International Monetary Fund (IMF), led by Ron van Rooden, visited Damascus from June 1–5, 2025, to assess the economic and financial conditions in the country, discuss the authorities’ policy priorities, and develop a roadmap for capacity building to assist the formulation and implementation of economic policies. At the conclusion of the mission, Mr. van Rooden issued the following statement:

“Syria faces enormous challenges following years of conflict that caused immense human suffering and reduced its economy to a fraction of its former size. Some six million people fled the country, mostly to neighboring countries, and an additional seven million were displaced internally. Output has plummeted, real incomes have fallen sharply, and poverty rates are high. State institutions have been weakened, the delivery of basic services has been disrupted, and large parts of the country’s infrastructure have been damaged or destroyed. Humanitarian and reconstruction needs are very large. There is great urgency to address these challenges and achieve a sustainable economic recovery, including to absorb the increasing number of returning refugees.

“The authorities are keen to restore economic growth and improve people’s living standards, and they intend to pursue sound economic policies. In this regard, the mission’s discussions focused on near-term policy and institution building priorities, including: (i) adopting a budget for the remainder of 2025, identifying available domestic and external resources and ensuring that priority spending needs are met, including the government payroll, basic health and education services, and assistance to the most vulnerable segments of the population; (ii) improving revenue mobilization, by modernizing the tax and customs regime, and by strengthening tax and custom administration, bringing both under the purview of the finance ministry; (iii) strengthening public financial management to improve budget execution and monitoring; (iv) empowering the central bank to ensure price stability and restore confidence in the national currency and adopting a monetary policy framework suited to achieve this; (v) rehabilitating the payment and banking systems, while enhancing the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime, to improve transaction efficiency, rebuild confidence in banks and restart financial intermediation, and allow reconnection with the international financial system; (vi) addressing immediate obstacles to market-based private sector development and improving the investment climate; and (vii) enhancing data collection, processing and dissemination, separate from economic planning, to ensure adequate data to support policy formulation and assessment.

“The authorities will need strong international support for their efforts. This includes financial support at highly concessional terms—given Syria’s financing and external sustainability constraints—and extensive capacity development assistance to strengthen economic institutions and upgrade outdated technologies and systems. While the years of conflict and displacement have weakened administrative capacity, staff at the finance ministry and central bank demonstrated strong commitment and solid understanding.

“The mission reaffirmed the IMF’s commitment to supporting Syria in these efforts. Based on the findings of the mission, IMF staff is developing a detailed roadmap for policy and capacity building priorities for key economic institutions, notably the finance ministry, central bank, and statistics agency. Staff will coordinate closely with other development partners in formulating this roadmap and ensuring effective support to the Syrian authorities, also considering constraints in absorptive capacity.     

“The staff team is grateful to the authorities for the candid and constructive discussions, and for their warm hospitality during this mission, the first in 16 years. The team met with Minister of Finance Yisr Barnieh, Governor of the Central Bank of Syria Abdulkader Husrieh, other senior officials, and representatives of the private sector and state-owned banks.”

https://www.imf.org/en/News/Articles/2025/06/10/pr-25188-syria-imf-staff-concludes-staff-visit-to-damascus

MIL OSI