Republic of San Marino: 2019 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for the Republic of San Marino
IMF Staff Country Reports, March 25, 2019
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- Republic of San Marino: 2019 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for the Republic of San Marino
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Bibliographic details
- Published: March 25, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498304887.002
Banking sector weaknesses and financial stability
- Deep-rooted weaknesses in the banking system have undermined economic activity and are now threatening financial stability and fiscal sustainability.
- Significant deposit outflows have left the banking system with low liquidity.
- Persistent losses and high non-performing loans (NPLs) resulted in sizable recapitalization needs, particularly in the state-owned bank.
- Slow progress in repairing the banking sector is identified as a key risk.
Macroeconomic outlook and growth projections
- Growth is projected to remain subdued in the coming years, reflecting continued banking sector deleveraging and a less favorable external environment, most notably in Italy.
- Continued banking-sector deleveraging is expected to constrain credit supply and economic activity.
Fiscal and public finance concerns
- The state faces sizable potential financial commitments to the banking system linked to recapitalization needs.
- Full and upfront recognition of the state’s financial commitments to the banking system is highlighted as a key risk to fiscal sustainability.
- Urgent actions are needed to safeguard public finances.
Policy recommendations and priorities
- Urgent actions are needed to restore banking sector viability and credit supply.
- Restore financial stability and safeguard fiscal sustainability through timely recognition and management of contingent liabilities related to the banking sector.
- Strengthen labor supply by better targeting social benefits.
- Further relax the hiring process of non-residents to support labor market needs and economic activity.
Subjects and keywords
- Subjects: Banking, Commercial banks, Financial institutions, Nonperforming loans, Public debt, Revenue administration, Tax allowances, Taxes
- Keywords: banking system, Commercial banks, CR, Europe, Global, government, government transfer, ISCR, liability positions vis-à-vis nonresident, Nonperforming loans, Sammarinese authorities, Sta government finance statistics, staff, state support, Tax allowances
Content in this bundle
- 1. External Sector Assessment