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International Monetary Fund. External Relations Dept.

Following is the text of the communiqué of the Group of Seven finance ministers and central bank governors from their meeting in Bonn on February 20.

International Monetary Fund. African Dept.

Request for a Four-Year Arrangement Under the Extended Credit Facility-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Liberia

International Monetary Fund. African Dept.

EXECUTIVE SUMMARY A transition government has been put in place to lead the country to elections in October 2015 and wishes to continue the existing ECF arrangement. The authorities feel the program provides continuity for the transition, and helps safeguard macroeconomic stability, while supporting reforms to address long-standing structural problems. Program performance has been satisfactory, with all performance criteria and most quantitative targets and structural benchmarks met. Staff’s assessment is that the transition authorities have the technical capacity and political will to implement the agreed measures. Growth has been revised downwards following multiple shocks. Reductions in commodity prices for the country’s two leading exports, the impact of Ebola in the region on tourism and services, and political uncertainty leading up to resignation of Compaoré’s government in late October 2014 all contributed to a marked slowdown in growth. Real growth is estimated to have been 4 percent in 2014 and is projected at 5 percent for 2015. Lower fiscal revenues forced large spending reduction/import compression. To eliminate large external and fiscal imbalances implied by the shocks and recent depreciation of the CFAF against the US dollar, through the CFAF peg to the euro, the transition government has reduced spending sharply. Even with spending adjustment, revenue measures, and additional budget support commitments from donors, large reserves drawdown will be required meet balance of payment needs. Together with approval of the delayed 2nd review and the 3rd review, the authorities request 40 percent of quota augmentation of access to help meet immediate balance of payments needs. Forward-looking program commitments encompass wide-ranging measures that have both immediate and longer term impacts. Revenue measures aim to reduce fraud and increase revenue intake, along with passage of the long-awaited revised mining code. Spending measures aim to safeguard priority social spending and contain the public wage bill. Extensive reforms are underway to improve budget transparency and cash management, after cash rationing in 2014 gave rise to domestic arrears. Finally, the authorities will implement recommendations of recent audits of state-owned energy companies, including performance contracts to regularize financial obligations and reduce costs, providing scope for better cost recovery, including through more flexible price-setting, in the future.

International Monetary Fund

The global financial crisis unmasked Serbia’s unsustainable pre-crisis growth model. Looking back, the Stand-By Arrangement (SBA) provided effective insurance against a financial meltdown, initiated the needed re-balancing of the economy, but could not prevent large job losses. Looking ahead, the transition to a more sustainable growth model remains incomplete and fragile. The export-led recovery is expected to continue picking up steam, but labor market conditions will remain difficult. The current account deficit is expected to remain relatively high, requiring significant capital inflows to maintain external balance.

International Monetary Fund

This paper discusses Mali’s 2005 Article IV Consultation and Second and Third Reviews Under the Poverty Reduction and Growth Facility (PRGF). The PRGF-supported program is broadly on track. Performance on quantitative aspects remains strong. Although the record on the structural program has been disappointing, the program for 2006 would mark significant progress on addressing key challenges. The IMF staff supports the authorities’ request for completion of the second and third reviews under the arrangement and waivers for nonobservance of three structural performance criteria.

International Monetary Fund
The global financial crisis unmasked Serbia’s unsustainable pre-crisis growth model. Looking back, the Stand-By Arrangement (SBA) provided effective insurance against a financial meltdown, initiated the needed re-balancing of the economy, but could not prevent large job losses. Looking ahead, the transition to a more sustainable growth model remains incomplete and fragile. The export-led recovery is expected to continue picking up steam, but labor market conditions will remain difficult. The current account deficit is expected to remain relatively high, requiring significant capital inflows to maintain external balance.
International Monetary Fund

Senegal achieved robust economic growth and low inflation under the economic program. Executive Directors emphasized the need to correct slippages in fiscal governance and transparency to ensure budgetary discipline and strengthen procurement rules and practices. They appreciated the action plan for the development and soundness of the financial system, simplifying loan recovery procedures and improving the efficiency of the judiciary system to reduce nonperforming loans and increase credit availability. They welcomed the comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty.

Mr. Julian Di Giovanni, Mr. Jing Zhang, and Mr. Andrei A Levchenko
This paper evaluates the global welfare impact of China's trade integration and technological change in a quantitative Ricardian-Heckscher-Ohlin model implemented on 75 countries. We simulate two alternative productivity growth scenarios: a "balanced" one in which China's productivity grows at the same rate in each sector, and an "unbalanced" one in which China's comparative disadvantage sectors catch up disproportionately faster to the world productivity frontier. Contrary to a well-known conjecture (Samuelson, 2004), the large majority of countries in the sample, including the developed ones, experience an order of magnitude larger welfare gains when China's productivity growth is biased towards its comparative disadvantage sectors. We demonstrate both analytically and quantitatively that this finding is driven by the inherently multilateral nature of world trade. As a separate but related exercise we quantify the worldwide welfare gains from China's trade integration.
Ms. Nicole Laframboise and Mr. Boileau Loko
This paper reviews the literature on the macroeconomic impact of natural disasters and presents the IMF’s role in assisting countries coping with natural catastrophes. Focusing on seven country cases, the paper describes the emergency financing, policy support, and technical assistance provided by the Fund to help governments put together a policy response or build a macro framework to lay the foundation for recovery and/or unlock other external financing. The literature and experience suggests there are ways to strengthen policy frameworks to increase resilience to natural disaster shocks, including identifying the risks and probability of natural disasters and integrating them more explicitly into macro frame-works, increasing flexibility within fiscal frameworks, and improving coordination amongst international partners ex post and ex ante.