Climate Change

Djibouti’s low and declining tax-to-GDP ratio underscores the need for well-designed tax policy reforms. Against this backdrop, the authorities requested capacity development support from the IMF’s Fiscal Affairs Department to identify reform options and priorities. The program focuses on income taxes, value-added taxes, and property taxes, and includes technical training on the estimation and reporting of tax expenditures.

A cornerstone of all successful inflation-targeting regimes is a strong commitment to price stability as the primary objective of monetary policy, operationalized through a clearly defined inflation target. When setting targets in the context of emerging market and developing economies, policymakers face a range of specific challenges relative to their counterparts in advanced economies, often including a more volatile economic environment and weaker institutional backdrop. This How-To Note provides conceptual and practical guidance on how these and other key factors shape the appropriate design of inflation targets in emerging market and developing economies, covering not only the target level, but also the specific inflation measure to be targeted, the relevant time horizon for meeting the target, and the width and interpretation of any associated bands. The note also covers: (1) key considerations involved in reviewing and potentially adjusting the specification of the target, stressing careful management of the heightened risks to credibility that these processes tend to entail for emerging market and developing economies; and (2) special issues associated with disinflation programs.

This technical assistance report responds to Cambodia’s Ministry of Economy and Finance request to support the development of a comprehensive framework for assessing tax expenditures. The report finds that Cambodia’s tax expenditures are widespread, costly, and largely unreported, with preliminary estimates pointing to sizeable fiscal cost. The assessment covers four major taxes—Personal Income Tax, Business Income Tax, Value Added Tax, and Specific Taxes (excises)—and recommends establishing clear benchmark tax systems, improving data quality, and institutionalizing regular tax expenditure reporting integrated into the budget process. The report emphasizes prioritizing capacity building, developing microsimulation models, and focusing evaluation efforts on the costliest tax expenditures to enhance transparency, fiscal discipline, and revenue mobilization.

This paper presents a nowcasting model for global trade that allows for regional dynamics and spillovers. World trade growth is driven by common global factors but also regional trends. While existing trade nowcasting models have focused on the former, we allow for the latter using a dynamic factor model (DFM) with a multi-factor block structure. By directly modeling global trends, regional variation and spillovers, we improve on the performance of standard trade nowcasting models, particularly periods characterized by regional heterogeneity. A multi-factor regional framework may be particularly advantageous for tracking trade developments in the future given a period changing trade patterns and geo-economic fragmentation. The model also sheds light on trade spillovers and the drivers of news in global trade: Asia, in particular, has notable spillovers to the global and other regional trade cycles.

This paper examines how Malta’s justice system impacts the efficiency of debt enforcement and insolvency proceedings, with implications for credit allocation and business and investment environment. Drawing on cross-country benchmarking, institutional diagnostics, and recent reforms, it identifies structural bottlenecks—particularly case backlogs, procedural inefficiencies and capacity constraints—that hinder timely resolution of judicial proceedings and credit enforcement. The analysis outlines priorities for strengthening enforcement, enhancing insolvency frameworks, improving court procedures and judicial system modernization via the use of technology.

This paper employs a Growth-at-Risk (GaR) framework to assess the impact of macro-financial variables on the growth rate distribution of Malta over a one-to-two-year horizon. The analysis suggests that while the baseline outlook is positive, large tail risks are associated with the domestic risk factors related to residential housing prices and household credit. Conversely, external factors from the Euro Area are likely to have a smaller direct impact on the growth rate distribution, transmitted through financial conditions in the bloc.