International Monetary Fund. Finance Dept., International Monetary Fund. Strategy, Policy, &, Review Department, and International Monetary Fund. Statistics Dept.
This paper provides background for a further round of discussions on the Fifteenth General Review of Quotas (hereafter 15th Review). The paper builds on work presented in previous staff papers and Directors’ views expressed in three meetings of the Committee of the Whole in September 2017 and February 2018. No proposals are presented at this stage, pending further Board guidance on possible approaches to narrowing the current differences of views.
This 2020 Article IV Consultation discusses that San Marino is now facing very significant challenges owing to the recent coronavirus disease 2019 (COVID-19) outbreak, which has taken a heavy toll on local population and businesses. The staff report reflects discussions with the Sammarinese authorities in January 2020 and is based on the information available as of January 31, 2020. It focuses on San Marino’s near- and medium-term challenges and policy priorities and was prepared before COVID-19 became a global pandemic and resulted in unprecedented strains in global trade, commodity, and financial markets. It, therefore, does not reflect the implications of these developments and related policy priorities. The outbreak has greatly amplified uncertainty and downside risks around the outlook. Staff is closely monitoring the situation and will continue to work on assessing its impact and the related policy response in San Marino and globally. With no credible measures to restore banking system health and in the face of a continued weak external environment, economic growth is projected to remain subdued in the coming years. Slow progress in repairing the banking system and failure to restore fiscal sustainability are the key and material risks.
This Article IV Consultation highlights that deep-rooted weaknesses in the banking system have undermined economic activity and are now threatening financial stability and fiscal sustainability. Significant deposit outflows have left the banking system with low liquidity, while persistent losses and high non-performing loans (NPLs) resulted in sizable recapitalization needs, particularly in the state-owned bank. Growth is projected to remain subdued in the coming years, reflecting continued banking sector deleveraging and a less favorable external environment, most notably in Italy. Slow progress in repairing the banking sector, and full and upfront recognition of the state’s financial commitments to the banking system are the key risks. Urgent actions are needed to restore banking sector viability and credit supply, safeguard public finances, and promote sustained economic growth. It is recommended to strengthen labor supply by better targeting social benefits and further relaxing the hiring process of non-residents.
This Selected Issues paper presents scenarios to assess debt dynamics and discusses key considerations in developing a medium-term fiscal strategy and adjustments.in San Marino. San Marino faces new fiscal challenges. Recent interventions in the financial sector are set to increase the debt to gross domestic product (GDP) level, although the eventual level of public debt remains highly uncertain. The government has granted banks the right to convert tax credits to government bonds, thus creating contingent liabilities. Going forward a fiscal strategy is needed. The scenario analysis in this paper suggests that the debt-to-GDP ratio could rise to 55–90 percent of GDP. Such levels would be high for San Marino and well above the level observed in other European microstates. At the same time, government deposits have been decreasing to a low level. A medium-term fiscal strategy could thus aim at containing the debt-to-GDP ratio and rebuilding deposits. The analysis in this paper offered considerations that could be helpful in determining fiscal adjustments needed to reach such targets.
This 2018 Article IV Consultation highlights that San Marino’s economy rebounded in 2016, on the back of recovering domestic demand and important gains in employment. However, the growth momentum slowed in 2017 amid financial sector uncertainties around a sizable loss at the largest bank and a closure of a small bank. Only moderate growth is projected in the near and medium term. The economy is projected to grow at 1.3 percent in 2018, driven by domestic demand. Private consumption is expected to recover gradually, and an externally financed investment project will add a significant boost to investment, which otherwise lacks support from the deleveraging banking sector.
Mr. Marco Marini, Mr. Robert Dippelsman, and Mr. Michael Stanger
In March 2017, the IMF published an upgrade of its Direction of Trade Statistics (DOTS)
dataset. This paper documents the new methodology that has been developed to estimate
missing observations of bilateral trade statistics on a monthly basis. The new estimation
procedure is founded on a benchmarking method that produces monthly estimates based on
official trade statistics by partner country reported at different times and frequencies. In this
paper we describe the new estimation methodology. Additional data sources have also been
incorporated. We also assess the impact of the new estimates on trade measurement in DOTS
at global, regional, and country-specific levels. Finally, we suggest some developments of
DOTS to strenghten its relevance for IMF bilateral and multilateral surveillance.
This 2017 Article IV Consultation highlights the slow recovery of San Marino’s economy after a deep recession following a series of financial sector shocks. Growth resumed in 2015 and accelerated in 2016 to an estimated 1 percent, thanks to stronger domestic and external demand. Moderate growth is expected in the near and medium term. GDP growth is projected to reach 1.3 percent in the medium term, driven by continued expansion in nonfinancial industries and services. However, following the current trend, the pace of growth would not be strong enough to bring output to precrisis levels over the next five years as risks remain tilted to the downside.
This paper offers elements of a possible strategy to deal with San Marino’s nonperforming loans (NPLs). It provides a brief overview of the reasons behind the accumulation of impaired assets by Sammarinese banks. This paper also presents some stylized facts regarding the nature and composition of San Marino’s problem loans. Further, it summarizes the experience of other small economies in dealing with weak banks and NPLs, with a view to drawing policy lessons. This paper also discusses recent measures implemented by the Sammarinese authorities to address weak financial institutions and their problem assets and examines the main impediments to deal with NPLs in San Marino’s legal and tax framework.
Over the last half decade, San Marino’s economy has managed to weather the implosion of its offshore banking model, the global crisis, and Italy’s decision to put San Marino on a tax blacklist. Together, these shocks resulted in a loss of a third of output since 2008, caused banking system NPLs to rise to over 40 percent—with the largest bank requiring 13 percent of GDP in public support—and pushed up net public debt by some 20 percent of GDP (from virtually nil five years ago). Looking forward, the economy is stabilizing, reflecting the inclusion of San Marino in Italy’s tax whitelist, but downside risks persist.
This 2014 Article IV Consultation on the Republic of San Marino highlights global crisis and tense relations with Italy, which triggered a 30 percent GDP contraction since 2008 and a sea change in San Marino’s off-shore banking model. High liquidity in the system allowed banks to withstand the shock to deposits. Cassa di Risparmio della Repubblica di San Marino, the largest bank, has required 13 percent of GDP in public support. The deep recession and bank recapitalization costs are weighing heavily on public finances.