{ "title": "IMF Staff Concludes Visit to San Marino", "publication": "IMF News, April 9, 2024", "sourceUrl": "https://www.imf.org/en/news/articles/2024/04/09/pr24110-san-marino", "canonical": "https://www.imf.org/en/news/articles/2024/04/09/pr24110-san-marino", "overlayPath": "/en/news/articles/2024/04/09/pr24110-san-marino/index.md", "summary": "IMF Staff Concludes Visit to San Marino", "publishDate": "2024-04-09", "sections": [ { "heading": "Mission timing and statement", "content": "- IMF mission visited San Marino during April 3-9, 2024.\n- Statement by Borja Gracia, IMF mission chief for San Marino.\n- Note: \"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.\"\n- \"Discussions will continue in the context of the Article IV consultation scheduled to take place in September.\"" }, { "heading": "Growth and labor market", "content": "- \"Growth in 2023 remained positive, thanks to the dynamic service sector, although manufacturing growth slowed down from historically high levels.\"\n- Manufacturing: key driver during 2021-22; \"slowed last year due to weak external demand and higher costs.\"\n- Manufacturing exports \"have stabilized at high levels.\"\n- Services: \"showed resilience and the labor market remains tight with close to full employment.\"\n- 2024 outlook: \"Growth in 2024 is projected to be around 1 percent, showing a moderate recovery, but uncertainty related to the volatile international environment weighs on the growth outlook.\"" }, { "heading": "Fiscal policy and public finances", "content": "- \"Prudent fiscal policy continued in 2023, but further consolidation efforts are needed to sustain these gains and ensure a strong fiscal position.\"\n- Government actions: \"appropriately saved inflation revenue windfalls and prudently indexed public sector wages and pensions below inflation containing spending pressures.\"\n- Vulnerabilities: San Marino is \"a euroized small open economy with remaining vulnerabilities in the financial sector and limited fiscal buffers.\"\n- Recommended fiscal actions:\n - \"Further consolidation is needed through tax policy reforms and improvements of spending efficiency.\"\n - \"A further recalibration of the pension system focused on addressing the challenges of an aging population, generous benefits and low penalties for early retirement will be needed to ensure the long-term sustainability of the pension system.\"" }, { "heading": "Banking sector, NPLs, and profitability", "content": "- Progress on NPLs:\n - Efforts \"reached a milestone with the establishment of the Asset Management Company and the introduction of calendar provisioning consistent with the European framework.\"\n - \"The securitization and Cassa di Risparmio della Repubblica di San Marino’s decision to write off legacy assets have substantially reduced NPLs.\"\n - \"The establishment of the government guarantee below expected recovery values minimizes fiscal risks.\"\n - Caveat: \"any undercapitalization that could arise from these developments should be promptly addressed with credible capitalization plans.\"\n- Profitability and liquidity:\n - \"Higher interest rates have significantly improved the profitability of banks without deteriorating the quality of the loan portfolio so far.\"\n - \"The liquidity of the banking system increased last year too.\"\n - Structural concerns: \"the structural profitability of most banks remains low.\"\n - Risks: \"with increasing deposit rates, interest margins will decrease impacting profitability. Profitability can also be affected by increasing NPLs given weak economic activity.\"\n- Policy recommendations for banks:\n - \"Banks should use profits earned last year to increase capital buffers.\"\n - \"Banks should improve structural profitability by restarting efforts to reduce high operational costs that have stalled over the last few years.\"\n - Follow the recommendation of the Central Bank of San Marino on capitalization and cost reduction." }, { "heading": "EU association agreement", "content": "- The EU association agreement \"offers an opportunity to further integrate San Marino’s economy in Europe and attract foreign investment by reducing costs.\"\n- Potential benefits:\n - \"Increase economic integration with the EU and expand market access by simplifying procedures and reducing legislative barriers.\"\n - \"Opportunity to strengthen Sammarinese public institutions as they adopt European standards and deepen their relations with EU counterparts.\"\n- Challenges:\n - \"Adopting the European financial framework will impose significant costs on the Central Bank of San Marino that will have to be addressed.\"\n\nPress Release No. 24/110 — April 9, 2024, IMF Staff Concludes Visit to San Marino\n\n---\n\n\n References\n\n- Italy and the IMF\n- Republic of San Marino and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/04/09/pr24110-san-marino" } ], "bullets": [ "[Markdown version](/en/news/articles/2024/04/09/pr24110-san-marino/index.md)", "[Structured JSON version](/en/news/articles/2024/04/09/pr24110-san-marino/index.json)", "[Bundle manifest](/en/news/articles/2024/04/09/pr24110-san-marino/bundle-manifest.json)", "Published: April 9, 2024", "IMF mission visited San Marino during April 3-9, 2024.", "Statement by Borja Gracia, IMF mission chief for San Marino.", "Note: \"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.\"", "\"Discussions will continue in the context of the Article IV consultation scheduled to take place in September.\"", "\"Growth in 2023 remained positive, thanks to the dynamic service sector, although manufacturing growth slowed down from historically high levels.\"", "Manufacturing: key driver during 2021-22; \"slowed last year due to weak external demand and higher costs.\"", "Manufacturing exports \"have stabilized at high levels.\"", "Services: \"showed resilience and the labor market remains tight with close to full employment.\"", "2024 outlook: \"Growth in 2024 is projected to be around 1 percent, showing a moderate recovery, but uncertainty related to the volatile international environment weighs on the growth outlook.\"", "\"Prudent fiscal policy continued in 2023, but further consolidation efforts are needed to sustain these gains and ensure a strong fiscal position.\"", "Government actions: \"appropriately saved inflation revenue windfalls and prudently indexed public sector wages and pensions below inflation containing spending pressures.\"", "Vulnerabilities: San Marino is \"a euroized small open economy with remaining vulnerabilities in the financial sector and limited fiscal buffers.\"", "Recommended fiscal actions:", "Progress on NPLs:", "Profitability and liquidity:", "Policy recommendations for banks:", "The EU association agreement \"offers an opportunity to further integrate San Marino’s economy in Europe and attract foreign investment by reducing costs.\"", "Potential benefits:", "Challenges:", "[Italy and the IMF](http://www.imf.org/external/country/ITA/index.htm)", "[Republic of San Marino and the IMF](http://www.imf.org/external/country/SMR/index.htm)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2024/04/09/pr24110-san-marino/index.md", "json": "/en/news/articles/2024/04/09/pr24110-san-marino/index.json", "bundleManifest": "/en/news/articles/2024/04/09/pr24110-san-marino/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T02:53:04.493Z" }