The COVID-19 pandemic has caused dramatic loss of human life and major damage to the European economy, but thanks to an exceptionally strong policy response, potentially devastating outcomes have been avoided.
Ján Klacso, Eugen Tereanu, Marco Forletta, and Mr. Marco Gross
We develop a semi-structural quantitative framework that combines micro and macroeconomic data to assess the effectiveness of combinations of borrower-based macroprudential measures in Slovakia. We expand on the integrated dynamic household balance sheet model of Gross and Población (2017) by introducing an endogenous loan granting feature, in turn to quantify the potential (ex-ante) impact of macroprudential measures on resilience parameters, compared with a counterfactual no-policy scenario, under adverse macroeconomic conditions. We conclude that (1) borrower-based measures can noticeably improve household and bank resilience to macroeconomic downturns, in particular when multiple measures are applied; (2) those measures tend to complement each other, as the impact of individual instruments is transmitted via different channels; and (3) the resilience benefits are more sizeable if the measures effectively limit the accumulation of risks before an economic downturn occurs, suggesting that an early, preemptive implementation of borrower-based measures is indeed warranted.
Mr. Marco Arena, Tingyun Chen, Mr. Seung M Choi, Ms. Nan Geng, Cheikh A. Gueye, Mr. Tonny Lybek, Mr. Evan Papageorgiou, and Yuanyan Sophia Zhang
Macroprudential policy in Europe aligns with the objective of limiting systemic risk, namely the risk of widespread disruption to the provision of financial services that is caused by an impairment of all or parts of the financial system and that can cause serious negative consequences for the real economy.
This Technical Assistance paper assesses Slovak Republic’s public investment management framework using the IMF’s Public Investment Management Assessment (PIMA) methodology and advises the authorities on options to strengthen further the management of public investment. State-owned enterprises are major investors in infrastructure but are subject to little central oversight of their operational or financial performance. The report makes seven recommendations aimed at strengthening PIM institutions and reducing the identified efficiency gap. These recommendations focus on key bottlenecks and challenges in the investment process. Issues that warrant the authorities’ primary attention include introducing a strategic planning framework for public investment; developing a fully-operational pipeline of major projects, based on clear and robust selection criteria; and improving the credibility of the annual budget and medium-term budget ceilings. It also recommends establishing a national strategy and norms for routine and capital maintenance budgeting that will enhance the quality of strategic existing infrastructure.