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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2025

May 6, 2025

Hong Kong SAR’s Economy in the Face of Climate Change: Risks and Prospects

Description: Hong Kong SAR is facing ongoing challenges from climate change, with projections indicating that these issues will remain prevalent or even intensify in the future. In response, Hong Kong SAR has embraced a comprehensive three-pronged climate strategy—the Climate Action Plan 2050—that focuses on mitigation, adaptation, and building resilience, and sets ambitious goals of reducing carbon emissions by 50 percent before 2035 and achieving carbon neutrality before 2050. Simultaneously, there is a concerted effort to bolster infrastructure and community resilience against natural disasters. Although significant strides have been made towards decarbonizing the economy and building resilience in the last few years, sustained action is pivotal to reach carbon neutrality, including by reducing emissions in hard-to-abate sectors and improving energy efficiency across industries. It would also be crucial to continue strengthening resilience against extreme weather events, further integrate climate into systemic risk analysis, and foster a green finance ecosystem.

May 6, 2025

The Fiscal Implications of Population Aging for Hong Kong SAR: Hong Kong Special Administrative Region

Description: Hong Kong SAR’s significant demographic pressures will create fiscal challenges for the authorities. Fiscal expenditure pressures from population aging have already been rising rapidly for over a decade and are expected to increase significantly in coming years, even without factoring in the cost of needed improvements to the social security system. An aging population is also going to adversely affect the economy’s potential output growth and fiscal revenue, with the effect larger in a scenario where the working age population shrinks. Revenue-boosting tax reforms and other fiscal measures will be needed to provide a stable funding base for Hong Kong SAR’s high-quality development into the medium term.

April 28, 2025

Liechtenstein: The Fiscal Sector Framework

Description: This paper analyzes Liechtenstein's fiscal framework, highlighting its successful consolidation following the global financial crisis. The study examines the budget balance rule that anchors fiscal policy, benchmarking key fiscal indicators against European peers. Findings reveal Liechtenstein effectively implemented frontloaded fiscal consolidation through revenue and expenditure measures, improving the fiscal balance by 4.1 percent of GDP during 2014-18. Despite maintaining low tax rates, Liechtenstein operates with a lean government structure, evidenced by low public employment levels and wage bills. The analysis concludes that increased capital investment could boost productivity, which has stagnated over the past two decades despite being higher than Switzerland's.

April 28, 2025

Cross-Border Income Flows in Liechtenstein: Principality of Liechtenstein

Description: In Liechtenstein, the gap between Gross Domestic Product (GDP) and Gross National Income (GNI) is significant due to the country’s economic structure as a financial center with a high percentage of cross-border commuters and globally competitive manufacturers contributing to high GDP per capita. Using currently available data, this paper examines the drivers of the GDP-GNI gap in Liechtenstein to provide a broader context of its high per capita income.

April 28, 2025

Liechtenstein as a Financial Center: Liechtenstein

Description: Liechtenstein has strategically positioned itself as a prominent financial center in the wake of the global financial crisis and increasing demands for transparency. The strategy emphasizes transparency, compliance and robust regulatory framework aligned with international standards. The financial sector is outsized compared to its economy, with significant assets under management reflecting its focus on international clients. Unlike many other financial centers, Liechtenstein does not significantly host shell corporations. While systemic risks are mitigated by off-balance sheet and unleveraged operations, the financial center model carries compliance and reputational challenges. Continued vigilance remains paramount for the sustainability of its financial center strategy.

April 28, 2025

Liechtenstein’s Pension System: Liechtenstein

Description: The paper analyzes Liechtenstein's three-pillar pension system, assessing its structure, funding mechanisms, sustainability and adequacy challenges. Liechtenstein's pension system operates on a three-pillar framework comprising public pensions (AHV-IV-FAK), mandatory occupational schemes, and voluntary insurance. With reserves exceeding 150 percent of GDP, the system ranks third globally in accumulated savings. Despite robust financial health and built-in intervention mechanisms, demographic projections indicate Pillar I assets will decline below statutory minimums by 2043. The research concludes that population aging and increased life expectancy will necessitate policy adjustments such as raising retirement ages or increasing contribution rates to ensure the system's long-term viability.

April 28, 2025

Labor Market in Liechtenstein

Description: Liechtenstein's labor market is characterized by a high reliance on non-resident workers, with commuters comprising the greater share of employment, particularly in higher-skilled occupations. With the steady inflow of skilled labor, infrastructure constraints have come into play and productivity has stagnated over time. Furthermore, a sizeable gender pay gap exists and the labor force participation of women and older workers remains relatively low.

April 28, 2025

Higher Frequency Indicators for Liechtenstein: Principality of Liechtenstein

Description: This paper describes steps to compile a high-frequency indicator of growth to be used for timely monitoring of real sector activity in Liechtenstein. Since the indicator is compiled with methods consistent with those used for national accounts, its development may also serve as an interim step towards production of quarterly GDP estimates. High-frequency indicators of growth measure domestic production rather than expenditure, making them well suited for monitoring Liechtenstein’s export-oriented economy.

April 18, 2025

Estimating Potential Output in Niger: Niger

Description: Potential growth in Niger is estimated at around 6 percent with a structurally significant contribution of labor and peaks of growth associated with higher investment in physical capital. Growth in Niger is, however, constrained by weak productivity, limited structural transformation, and inadequate economic diversification, with downside risks stemming mainly from regional insecurity and adverse climate shocks. Key factors that could boost economic growth in Niger include investment in human capital, the development of the extractive sector and agro-industrial value chains and the diffusion of digital technologies.

April 18, 2025

Enhancing Governance in Niger: Progress, Challenges, and Policy Priorities

Description: Niger, a low-income and conflict-affected state, faces significant governance challenges that hinder economic development. The military takeover in 2023 has altered the governance landscape, resulting in concerning trends such as the suspension of the Constitution and the dissolution of the Supreme Audit Institution. These changes have negatively impacted public procurement transparency, especially in defense spending. Despite these setbacks, the new authorities express a commitment to improving governance, a key element of their development strategy. This paper reviews recent governance and anti-corruption developments in Niger, emphasizing the need for ongoing efforts to strengthen governance and uphold the rule of law.

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