To reduce the negative effects of a bank-lending crunch on economic activity, adequate credit provision should be ensured. Further bank recapitalization, restructuring and consolidation of the banking sector, and regulatory reform decisions will reduce uncertainty. A long-lasting configuration of the euro-area’s fiscal architecture can be achieved by tightly coordinated reforms of national fiscal frameworks. Substantial benefits will emanate from deepening further structural reforms. Financial sector reform in the EU is proceeding at a rapid pace, and poses challenges and opportunities for the EU.
The conceptual framework of this paper assumes that macroeconomic performance depends on the interplay between the economic environment and policies. Declining labor shares, wage moderation, and employment performance in Germany and the Netherlands have been presented. A number of policy changes are under way, but additional reforms may be needed to fully reap the benefits of the new economy. The tax reform package marks a radical and constructive shift in German tax policy, and the pension system requires a sea of change in public policy reforms.
The staff report for the 2004 Article IV Consultation on France highlights economic performance and near-term outlook and policies. On structural issues, a health care reform has established the key instruments to gain control over the system’s budget. Ongoing civil service reform and decentralization are providing the opportunity to realize efficiency gains. Pension and health care reforms have improved the long-term fiscal outlook against the background of the impending demographic shock, while ongoing reforms in product markets are likely to boost growth.
Luxembourg's impressive growth performance has been accompanied by regional specialization of production, high labor mobility, export-propelled growth, and the dominance of regional growth fluctuations. Luxembourg's public pension system faces the challenges of population aging and Luxembourg's small, open, and highly specialized economy. Luxembourg's labor market performance holds a seeming paradox, favorable labor market outcomes are coupled with rigid labor market institutions. The supervision of cross-border financial activities raises the difficult challenge of obtaining a complete, consolidated view of the operations of international banking institutions.
This Selected Issues paper of the Republic of Estonia reviews the current account deficits, sustainability, and external solvency in the Baltic countries. The paper describes labor market trends in Estonia after the transition, institutional makeup of the market, and its effects on unemployment. The paper also discusses developments in regional unemployment, effects of regional disparities on average unemployment, and policy recommendations. Finally, the statistical appendix highlights the IMF's projections and estimates for the Republic of Estonia.
Luxembourg's economic and fiscal performance has remained impressive. A proactive policy approach focused on institutional reforms will bolster the economy and public finances to growth reversals. A shift to a more diversified pension system should be a policy priority. Further income tax reforms are desirable. The management of the public sector's holdings of financial assets should be improved. An exceptionally favorable economic environment has blunted Luxembourg's labor market rigidities but reforms are needed. Maintaining effective banking supervision and governance should remain a priority of public policy.
This Selected Issues paper examines fiscal policy implications for labor market and economic diversification in Botswana. The IMF report analyzes that large public employment significantly affect labor market outcomes in middle-income countries, including Botswana. It is noted that reforms aimed at reducing the rents and the size of the public sector is likely to significantly improve market outcomes in Botswana. As part of efforts to find new engines of growth and support sustainable long-term and broad-based growth, Botswana has over the years also vigorously pursued policies to diversify the economy.
The review outlines a simple analytical model to explain the unemployment puzzle, especially the U-curve phenomenon. It analyzes the central institutional imperfections that characterize the existing Mauritian labor market and suggests possible reforms. It also reviews the IMF’s projections and estimates on consolidated monetary survey, summary accounts of the Bank of Mauritius, commercial banks and offshore banks, balance of payments, summary of the tax systems and government finances, sugar cultivation, yields and output, real growth rates of expenditure on gross domestic product, gross domestic product real growth rates by industrial origin and at current prices, 1998–2002, and so on.
This Selected Issues paper analyzes Portugal’s export performance in 2006 and assesses whether it might augur a sustained recovery. The paper examines the factors underlying the recent export rebound, and searches for signs of fundamental changes in structures of the export industries during the last decade. It highlights the importance of labor market flexibility. Using a four-country version of the IMF Global Economic Model, the paper attempts to illustrate the benefits of labor market reform to help close the competitiveness gap.
This Selected Issues paper describes labor market trends in Belarus and the role of labor market institutions in the outcome. The paper examines the current status of the tax system in Belarus and assesses recent efforts to reform it. It argues that the current tax system in Belarus is distortionary, and that it weakens the competitiveness of the economy. The paper also provides preliminary estimates of the pass-through from the nominal exchange rate (for the U.S. dollar and the ruble) to inflation in Belarus.