Selected Issues Papers

IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries.

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2024

May 17, 2024

Securing Fiscal Discipline and Credibility in WAEMU

Description: Fiscal consolidation and the reintroduction of the WAEMU fiscal framework is crucial for maintaining debt sustainability, external viability, and financial stability. The 3 and 70 percent of GDP deficit and debt ceilings envisaged by the expired rule remain appropriate, while addressing the stock-flow adjustments will help rebuild fiscal buffers. Convergence to a fiscal deficit of 3 percent of GDP should be ensured by 2025— barring exceptional circumstances—with focus on domestic revenue mobilization, while controlling expenditure. To secure fiscal discipline and credibility, it is essential to revamp the fiscal rule with a credible debt correction mechanism and exogenous escape clauses.

May 17, 2024

Recent Challenges to the Conduct of Monetary Policy in the WAEMU

Description: This paper discusses recent challenges in BCEAO monetary policy, from a recent spike in inflation, the persistent erosion of external reserves, and strains in the regional financial market. In response to these shocks, the BCEAO operated via both policy rates and liquidity management, including by shifting from fixed to variable rate auctions. The paper finds that the conduct of monetary policy became progressively more constrained by financial stability and external viability challenges, arguing for enhanced monetary-fiscal policy coordination to help the BCEAO meet its reserves objectives.

May 17, 2024

Key Banking System Risks in the WAEMU

Description: The gradual alignment of prudential regulations on Basel II/III standards since 2018, as well as improvements in banking supervision and macroprudential surveillance, have contributed to the WAEMU’s banking system’s resilience to recent global and regional shocks. However, while cyclical vulnerabilities have been contained, bank credit portfolios remain highly concentrated, and their exposure to sovereign risks has grown substantially in recent years, together with liquidity risks. Further reforms building on those recently implemented in line with recommendations from the 2022 Financial Sector Assessment Program (FSAP), including to enhance macroprudential policy’s effectiveness and banking supervision frameworks, will help address such vulnerabilities.

May 17, 2024

Climate Change in the WAEMU: Trends, Macro-criticality and Options Going Forward

Description: This paper focuses on the trends in climate change in the WAEMU, assesses the criticality of climate change for the region, and reviews the related policy and financing options going forward. Climate change has been increasingly affecting the lives and livelihoods in the WAEMU. Temperatures have risen significantly, and climate-related disasters have hit the region more frequently in recent decades. Climate change can exacerbate the current challenges and hinder long-term economic prospects by threatening economic growth, food security, fiscal and external sustainability, and social outcomes in the region. Macroeconomic policies, structural reforms and cooperation among different parties remain critical alongside regional efforts, in particular to have access to necessary financing and bolster adaptation efforts.

May 17, 2024

Gender Inequality in the WAEMU: Current Situation and Opportunities

Description: This paper documents the current state of gender inequalities in the WAEMU by focusing on outcomes (health, education, labor market and financial inclusion) and opportunities (economic rights). The findings show that despite significant progress toward gender equality over the last three decades, there are still prevalent gender-based disparities, which prevent women from fulfilling their economic potential. Both empirical and model-based estimates suggest that the WAEMU can reap substantial economic gains by mitigating the existing gender gaps in schooling and labor market outcomes. Hence, achieving gender equality remains a macro-critical goal for the region. Going forward, the need for specific policies supportive of gender equality may vary in each member country, but a multifaceted and holistic approach is needed to unleash the related economic potential in the WAEMU as a whole.

February 21, 2024

2022 FIFA World Cup: Economic Impact on Qatar and Regional Spillovers

Description: Qatar hosted the 2022 FIFA World Cup (WC) successfully and took the opportunity to further develop its non-hydrocarbon economy. Near-term contributions to Qatar’s economy, from visitors’ spending and WC-related broadcasting revenue, of up to 1 percent of GDP was comparable to cross-country experiences. The event generated positive regional economic spillovers as a sizeable share of spectators stayed in and commuted from neighboring GCC countries. Longer-term contributions were significant—the large investment in general infrastructure ahead of the WC drove much of the non-hydrocarbon sector’s growth in the past decade. The high-quality infrastructure and global visibility brought by the WC should be leveraged to further promote diversification and achieve the National Vision 2030.

February 21, 2024

From HydroCarbon to Hightech: Mapping the Economic Transformation of Qatar

Description: Qatar’s state-led, hydrocarbon intensive growth model has delivered rapid growth and substantial improvements in living standards over the past several decades. Guided by the National Vision 2030, an economic transformation is underway toward a more dynamic, diversified, knowledge-based, sustainable, and private sector-led growth model. As Qatar is finalizing its Third National Development Strategy to make the final leap toward Vision 2030, this paper aims to identify key structural reforms needed, quantify their potential impact on the economy, and shed light on the design of a comprehensive reform agenda ahead. The paper finds that labor market reforms could bring substantial benefits, particularly reforms related to increasing the share of skilled foreign workers. Certain reforms to further improve the business environment, such as improving access to finance, could also have large growth impact. A comprehensive, well-integrated, and properly sequenced reform package to exploit complementarities across reforms could boost Qatar’s potential growth significantly.

February 20, 2024

Recent Trends of Informality in Greece: Evidence from Subnational Data

Description: This paper explores the evolution of informality in Greece as it is widely considered one of the major structural impediments to fiscal capacity and sustainable growth. It finds that informality has dropped significantly in Greece in recent years, although there were temporary increases during the sovereign debt crisis and the COVID-19 pandemic. Lower informality is also found to be associated with higher subsequent per capita GDP growth and higher tax revenue. Moreover, Greece’s significant recent progress in digitalization appears to have helped reduce informality. There remains scope to further reduce informality by accelerating digitalization and the ongoing pro-growth structural reforms.

February 20, 2024

The Cost-of-Living Crisis: Impact and Policy Support to Households, Evidence from Micro-Level Data: Greece

Description: The Greek government has provided substantial support to households to cope with the high cost of living in 2022–2023. This paper leverages on the rich micro-level data on household consumption in the Household Budget Survey to study the distributional impact of price increases. Policy simulations suggest that targeted support measures tailored to the recipients’ needs remain the most effective way to mitigate the vulnerable households’ income loss.

February 20, 2024

Macroprudential Policy Calibration for Greece: Simulations for Borrower-Based Measures

Description: The Greek financial system has remained resilient underpinned by strengthening banks’ balance sheets, but still faces significant challenges ahead including the re-emergence of imbalances in the real estate market. Recognizing these imbalances, the authorities have recently introduced the necessary legal framework for setting borrower-based measures (BBMs), paving the way to activate both income- and collateral-based measures in near term. Simulations, which employ a quantitative framework combining micro- and macro-level data, show that BBMs would help enhance household resilience, with synergies when caps on debt service-to-income (DSTI) and loan-to-value (LTV) ratios are jointly implemented, leading over time to the more resilient banking system against potential risks. Caps could initially be set at less binding levels and gradually tightened based on a systemic risk assessment.

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