Republic of San Marino: Selected Issues

IMF Staff Country Reports, April 11, 2018

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Presents scenarios to assess debt dynamics and discusses key considerations in developing a medium-term fiscal strategy and adjustments in San Marino.
Focuses on implications of recent interventions in the financial sector, contingent liabilities created by policy measures, and the need to rebuild government deposits.

Recent interventions in the financial sector are set to increase the debt to gross domestic product (GDP) level, although the eventual level of public debt remains highly uncertain.
The government has granted banks the right to convert tax credits to government bonds, thus creating contingent liabilities.
Scenario analysis suggests that the debt-to-GDP ratio could rise to 55–90 percent of GDP.
Such levels would be high for San Marino and well above the level observed in other European microstates.
Government deposits have been decreasing to a low level.

A medium-term fiscal strategy is needed going forward.
The fiscal strategy could aim at:
- Containing the debt-to-GDP ratio.
- Rebuilding government deposits.
The analysis offers considerations that could be helpful in determining fiscal adjustments needed to reach such targets.

Subjects: Contingent liabilities, External debt, Fiscal consolidation, Fiscal policy, Interest payments, Public debt, Public financial management (PFM), Tax allowances, Taxes.
Keywords: Contingent liabilities, CR, debt, debt path, debt ratio, debt ratio reach, debt stock, debt target, Fiscal consolidation, Global, IMF staff calculation, Interest payments, ISCR, path Under Various Shocks, San Marino authorities, Tax allowances.

Republic of San Marino: Selected Issues, IMF Staff Country Reports 2018, No. 102 (April 11, 2018).