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  • Monetary Policy, Central Banking, and the Supply of Money and Credit: General x
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Mario Pessoa, Andrew Okello, Artur Swistak, Muyangwa Muyangwa, Virginia Alonso-Albarran, and Vincent de Paul Koukpaizan
The value-added tax (VAT) has the potential to generate significant government revenue. Despite its intrinsic self-enforcement capacity, many tax administrations find it challenging to refund excess input credits, which is critical to a well-functioning VAT system. Improperly functioning VAT refund practices can have profound implications for fiscal policy and management, including inaccurate deficit measurement, spending overruns, poor budget credibility, impaired treasury operations, and arrears accumulation.This note addresses the following issues: (1) What are VAT refunds and why should they be managed properly? (2) What practices should be put in place (in tax policy, tax administration, budget and treasury management, debt, and fiscal statistics) to help manage key aspects of VAT refunds? For a refund mechanism to be credible, the tax administration must ensure that it is equipped with the strategies, processes, and abilities needed to identify VAT refund fraud. It must also be prepared to act quickly to combat such fraud/schemes.
International Monetary Fund. Middle East and Central Asia Dept.
As in many other countries in the world, the pandemic has exerted a heavy toll on Morocco’s population. Its economy has also been hit by a severe drought that affected agriculture output. The authorities’ prompt response has helped contain the social and economic damage from the shocks but could not avoid a severe contraction of GDP. The loss of tax revenues deteriorated the fiscal position, while the fall in tourism receipts widened the current account deficit. However, greater access to external borrowing, including the full drawing of the IMF Precautionary and Liquidity Line (PLL) arrangement, has helped maintain international reserves at adequate levels so far in 2020. A gradual economic recovery is expected to begin in 2021, assuming the impact of the drought and the health crisis wane next year. The recent rise in COVID-19 cases, both in Morocco and its main trading partners, suggests that this outlook remains subject to significant downside risks.
International Monetary Fund. Middle East and Central Asia Dept.
As in many other countries in the world, the pandemic has exerted a heavy toll on Morocco’s population. Its economy has also been hit by a severe drought that affected agriculture output. The authorities’ prompt response has helped contain the social and economic damage from the shocks but could not avoid a severe contraction of GDP. The loss of tax revenues deteriorated the fiscal position, while the fall in tourism receipts widened the current account deficit. However, greater access to external borrowing, including the full drawing of the IMF Precautionary and Liquidity Line (PLL) arrangement, has helped maintain international reserves at adequate levels so far in 2020. A gradual economic recovery is expected to begin in 2021, assuming the impact of the drought and the health crisis wane next year. The recent rise in COVID-19 cases, both in Morocco and its main trading partners, suggests that this outlook remains subject to significant downside risks.
International Monetary Fund. Middle East and Central Asia Dept.
This 2019 Article IV Consultation with Morocco discusses that gradually increasing growth, moderate inflation, and stronger external and fiscal buffers are expected over the medium term, benefiting from sustained reform implementation. However, this outlook remains subject to significant domestic and external risks: delays in implementing reforms, lower growth in key partner countries (particularly in the euro area), higher oil prices, geopolitical risks, and volatile financial conditions could weaken Morocco’s resilience and economic prospects. Building on progress achieved in recent years, further fiscal and structural reforms are needed to consolidate gains in macroeconomic resilience and achieve higher and more inclusive growth. The discussions mainly focused on strengthening the resilience of the economy through continued fiscal reforms, greater exchange rate flexibility, and strengthened financial sector soundness. It also highlighted the need for pushing ahead with mutually-reinforcing and properly sequenced reforms to raise growth and inclusion, including by improving public sector governance, promoting private sector development, and reducing inequalities.
International Monetary Fund. Middle East and Central Asia Dept.
This 2017 Article IV Consultation highlights that Tunisia’s economic growth almost doubled to 1.9 percent in 2017, as confidence strengthened on the back of improved security and the unity government’s early progress with policy and reform implementation. Investment and exports remained sluggish, however. Growth is expected to reach 2.4 percent in 2018, helped by a good agricultural season and a pickup in manufacturing and tourism. The unemployment rate remains high at 15 percent. Trade data for early 2018 show an improvement in export performance, while import growth is slowing. This favorable trend is expected to continue throughout the remainder of the year, supported by a more favorable real exchange rate.