The 2008 Article IV Consultation with the Russian Federation highlights that the Russian banking system has proven to be relatively resilient in the face of worldwide turmoil. The central bank is still intervening heavily in the foreign exchange market, and Russia’s banking system is still comfortably liquid with overnight interbank rates at the lower end of the usual trading range. Executive Directors suggested a careful reconsideration of the authorities’ policy stance, so that price developments are not shaped primarily by uncertain external developments that remain beyond the authorities’ control.
Mr. Alex Segura-Ubiergo, Miss Taline Koranchelian, and Mr. Carlos Mulas-Granados
Subsidy reform has been a key component of the pre-accession reform agenda of the 10 new member states that joined the EU in 2004 (EU-10). During the pre-accession period, these countries had to undertake a number of important structural reforms in their economies. One of the most critical reforms was to reduce, and in some cases, eliminate their subsidy programs. This paper analyzes how key subsidy reforms (in state aid to enterprises, agriculture, energy, and transportation) were carried out in the EU-10 during 1995–2005, and explains observed variations across types of subsidies and across countries. Based on an extensive qualitative analysis, the paper draws lessons for future successful reforms of government subsidies. 32B
IMF research summaries on (1) oil market developments and the global economy (by Selim Elekdag), and (2) credit booms (by Marco Terrones); country study on India (by Helene Poirson); call for papers for November 2007 Jacques Polak Eighth Annual Research Conference; listing of contents of Vol. 54, Issue No. 2 of IMF Staff Papers; listing of recent IMF Working Papers; and listing of visiting scholars at the IMF during April-June 2007
Romania’s 2004 Article IV Consultation and Request for Stand-By Arrangement (SBA) are discussed. The authorities have requested a new precautionary 24-month SBA to secure macroeconomic stabilization and keep European Union accession on track. Romania has preserved competitiveness, despite the slowdown in depreciation and recently strong domestic demand. Exports remained the strongest component of aggregate demand and Romania continued to increase market share in its main trading partners. An exchange-rate-based monetary policy has been successful in accomplishing disinflation but has faced challenges in containing credit growth.
This paper reviews the experience of the IMF’s long-term engagement in Romania and options for future IMF involvement. The unfavorable growth performance also reflected adverse conditions for private sector development. Foreign investors have welcomed the more stable macroeconomic environment and the tax legislation overhaul under the recent Stand-By Arrangement. Although the overlap between Bank and IMF conditionality in the area of structural reforms was not conducive to reducing the number of conditions, it helped increase the pressure on the authorities to maintain the reform momentum.
This paper assesses Romania’s Third Review Under the Stand-By Arrangement and a Request for Waiver of Performance Criterion. Romania’s macroeconomic performance continued to be favorable, but slippages in wage policy and privatization delayed the completion of the third review. Robust GDP growth continued throughout 2002, and progress in reducing inflation and the current account deficit was better than targeted. However, financial discipline in the state-owned sector remained weak, and the end-September performance criterion on the wage bill in monitored state-owned enterprises was not observed.
The likely enlargement of euro-area membership will radically change the environment under which monetary policy will be made in the euro area. Within less than a decade, the number of member countries in the euro area could more than double, with the vast majority of accession countries being relatively small in economic terms, compared with current members. Absent reforms, such a significant but asymmetric expansion could impede the effectiveness of the institutional policymaking process of the European Central Bank (ECB) and be seen by some as resulting in the overrepresentation of small member countries in the ECB Council. The paper illustrates these issues, describes the principles on which reforms of the ECB statute could build, and discusses four specific institutional reform scenarios. The analysis coincides with the ECB Council being scheduled to present suggestions for reform by late 2002.
This Selected Issues paper presents a brief overview of developments and prospects for the petroleum sector of the Republic of Kazakhstan. The paper conducts a comprehensive assessment of fiscal vulnerability, fiscal sustainability, and fiscal stance in Kazakhstan, focusing on the government’s non-oil budget balance while taking into account some of the key characteristics of resource-rich countries. The paper states that the key issue is how much the government should consume and save out of oil revenues and how these decisions should change in response to changes in key aspects of fiscal vulnerability in Kazakhstan.