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Europe > Ukraine

You are looking at 1 - 10 of 33 items for :

  • Type: Journal Issue x
  • Financial Institutions and Services: Government Policy and Regulation x
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Cover Policy Papers
Review of the Adequacy of the Fund’s Precautionary Balances
International Monetary Fund. Finance Dept.
On March 20, 2024, the IMF’s Executive Board reviewed the adequacy of the Fund’s precautionary balances. The review took place somewhat ahead of the standard two-year cycle, in view of the imminent attainment of the current indicative medium-term indicative target of SDR 25 billion for the first time. Precautionary balances comprise the Fund’s general and special reserves. They are a key element of the IMF’s multi-layered framework for managing financial risks. Precautionary balances provide a buffer to protect the Fund against potential losses, resulting from credit, income, and other financial risks. The review was based on the assessment framework established in 2010, which uses an indicative range for precautionary balances, linked to a forward-looking measure of total IMF non-concessional credit, to guide decisions on adjusting the medium-term target over time. While financial risks remain high, they are broadly unchanged from the last review, taking into account the further accumulation of reserves and strengthening of some risk mitigants. Against this background, Executive Directors broadly supported staff’s proposal to retain the current medium-term target of SDR 25 billion and increase the minimum floor from SDR 15 billion to SDR 20 billion. The Board also supported maintaining the biennial review cycle, with earlier reviews if warranted by developments that could materially affect the adequacy of precautionary balances.
Keywords:
Non-concessionary; Lending; Risks; Reserves; Credit; Mitigation; Provisioning; management framework; income risk; concentration risk; Fund credit; I. financial risks; demand scenario; lending portfolio; Credit risk; Income; Capital adequacy requirements; Market risk; Global
Cover IMF Staff Country Reports
Kyrgyz Republic: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Kyrgyz Republic
International Monetary Fund. Middle East and Central Asia Dept.
The 2023 Article IV Consultation highlights that the Kyrgyz economy grew strongly in 2023, led by construction and trade, despite the challenging regional environment. Tax revenue mobilization improved, and public debt declined. Headline inflation fell from 14.7 percent in December 2022 to 7.3 percent in December 2023, supported by a marked reduction in food and fuel inflation, but demand pressures have kept core inflation elevated. The official current account deficit has remained significant due to the decline in net remittance inflows, lower gold exports, and unrecorded re-exports. Output is expected to grow at its potential rate of 4 percent in the medium term, inflation decline to mid-single digits, and public debt remain contained. Current favorable macroeconomic conditions present a window of opportunity to strengthen the policy framework and raise growth prospects through structural reforms. The priorities are strengthening governance, including management and privatization of state-owned enterprises, enhancing competition, reforming the electricity sector, and strengthening social safety nets.
Keywords:
staff appraisal; Kyrgyz authorities; policy recommendation; January monetary policy meeting; headline inflation; Debt sustainability analysis; Government finance statistics; Global
Cover IMF Staff Country Reports
Republic of Kazakhstan: Financial Sector Assessment Program-Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision
International Monetary Fund. Monetary and Capital Markets Department
This paper presents Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision for the Republic of Kazakhstan Financial Sector Assessment Program. Along with the financial stability mandate, the Agency of the Republic of Kazakhstan for the Regulation and Development of the Financial Market (ARDFM) pursues a development objective, including by supporting the expansion of banks’ loans portfolio, which can conflict with the safety and soundness of banks and the banking system, and it is not subordinate to it. ARDFM began its activities during the coronavirus pandemic. Banks’ asset quality, while improving, remains a source of concern. However, supervisory discretion is constrained as the law enables the ARDFM to exert its motivated judgment. The ARDFM should perform a more intrusive oversight of related party transactions, including onsite reviews. In addition, the authorities should take more stringent corrective measures vis-à-vis gaps in banks’ related party framework and practices.
Keywords:
regulator's independence; prudential mandate; risk-based supervision; consolidated supervision; related parties; NPL definition; interest rate risk; AML/CFT; IMF-World Bank Financial Sector Assessment Program; Kazakhstan tenge; due diligence; adequacy ASSESSMENT process; staff team of the International Monetary Fund; banking group; risk weight assets; Internal controls; Stress testing; Credit risk; Market risk; Operational risk; Global
Cover IMF Working Papers
Determinants of Zombie Banks in Emerging Markets and Developing Economies
Torsten Wezel
,
Hannah Sheldon
, and
Zhengwei Fu
While deeply undercapitalized banks have been shown to misallocate credit to weak firms, the drivers of such zombie banks are less researched, particularly across countries. To furnish empirical evidence, we compile a dataset of undercapitalized banks from emerging markets and developing economies. We classify zombie banks as those not receiving remedial treatment by owners or regulators or, alternatively, remaining chronically undercapitalized. Using logit regressions, we find that country-specific factors are more influential for zombie status than bank characteristics, alhough some become significant when disaggreating by region. The paper’s overall findings imply the need for a proper regulatory framework and an effective resolution regime to deal with zombie banks more decisively.
Keywords:
Banks; Capital Requirements; Financial Crises; summary statistics; zombie bank; zombie share; zombie status; equity ratio; Banking crises; Bank resolution; Credit; Asia and Pacific; Global; Europe; Africa
Cover Technical Notes and Manuals
Resolving Opaque Bank Ownership and Related-Party Exposures
Edda R Karlsdóttir
,
Rachid Awad
,
Ender Emre
,
Alessandro Gullo
,
Aldona Jociene
, and
Constant Verkoren
This note intends to provide advice to bank supervision and resolution authorities and policymakers seeking to deal with opaque bank ownership or significant overhang of related-party exposures.
Keywords:
bank Ownership structures; bank Ownership transparency; IMF Library; bank owner; related-party transaction; Basel Core Principles; Anti-money laundering and combating the financing of terrorism (AML/CFT); Bank resolution; State-owned banks; Global
Cover IMF Staff Country Reports
Belgium: Financial Sector Assessment Program-Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This paper focuses on the report on Belgium’s Financial Sector Assessment Program. Economic activity has slowed, core inflation remains high, and the fiscal outlook is challenging. The financial sector has remained resilient despite a series of shocks. Key financial stability risks emanate from the large, concentrated, and interconnected banking sector, private sector indebtedness, and high exposure to real estate. Bank solvency stress tests indicate that the financial sector is resilient under severe macroeconomic shocks. Although there is some heterogeneity across financial institutions, all banks would satisfy the minimum capital criteria. The authorities should enhance the National Bank of Belgium’s powers to set macroprudential policy in line with its financial stability mandate. In the near term, the extension/ setting of capital requirements should be streamlined, without the requirement for government approval. There is scope to strengthen the corporate governance framework and expectations for banks, and boost prudential supervisory staffing, especially given upcoming regulatory developments.
Keywords:
bank solvency stress tests; insurance solvency stress test; NBB coordination; corporate governance framework; cash flow; B. bank Oversight; market share; Stress testing; Financial sector stability; Insurance companies; Financial Sector Assessment Program; Global; Europe
Cover Departmental Papers
Navigating Fiscal Challenges in Sub-Saharan Africa: Resilient Strategies and Credible Anchors in Turbulent Waters
Mr. Fabio Comelli
,
Peter Kovacs
,
Jimena Jesus Montoya Villavicencio
,
Arthur Sode
,
Mr. Antonio David
, and
Mr. Luc Eyraud
Sub-Saharan African countries have been hit, in recent years, by a cascading series of shocks that have exacerbated fiscal vulnerabilities. Significant reforms are needed to rebuild buffers and preserve the sustainability of public finances. The paper argues that a strategic approach to fiscal policy is needed, as policies in the region typically lack an effective anchor and are excessively focused on short-term goals. An explicit debt target is a crucial element of the fiscal strategy. But calibrating this anchor is a difficult exercise. This paper contributes to the debate by proposing a novel method tailored to the low-income country context, which relies on the principle of the preservation of debt-servicing capacity. Results using this method point to a median debt anchor of 55 percent of GDP in the region. Moreover, the paper also shows that most (though not all) countries will need to consolidate over the medium term to achieve prudent debt targets. Adjustment needs are in the order of 2 to 3 percent of GDP over the next five years for the median country. This consolidation seems feasible given historical experience and domestic revenue mobilization should play a central role in the adjustment process. Nevertheless, there is significant heterogeneity across countries: about a quarter of sub-Saharan African economies still have some fiscal space and can use it to continue making vital investments in human and physical capital. Finally, the paper discusses critical institutional reforms that are tailored to developing countries’ needs and constraints, including in the areas of medium-term budgeting, fiscal risk management, expenditure controls and revenue administration.
Keywords:
Fiscal Strategy; Fiscal Anchors; Political Economy; Africa; Covid-19; fiscal policy-Sub-Saharan Africa; fundamentals in Sub-Saharan Africa; debt Tolerance fundamentals; risk status; factors impacting debt Tolerance; government debt burden in Sub-Saharan Africa; Fiscal consolidation; Fiscal stance; Sub-Saharan Africa; Global
Cover IMF Staff Country Reports
Union Des Comoros: Deuxième Revue Au Titre Du Programme De Référence— Communiqué De Presse; Rapport Des Services Du Fmi Pour L’union Des Comores; Analyse De Viabilité De La Dette; Lettre D’intention; Et Memorandum De Politiques Economiques Et Financières
International Monetary Fund. African Dept.
Comoros is a small, fragile island state (population: 850,000) with low and shock-prone growth. A Staff-Monitored Program (SMP) has been in place since July 2021. Policies aimed to: (i) contain and recover from the COVID-19 pandemic; and (ii) start implementing reforms to overcome fragility, boost inclusive growth, and limit risks. The first review assessed implementation through end-September 2021 as satisfactory and rescheduled three structural benchmarks that needed more time from end-December 2021 to end-February 2022. This second (and final) review assessed implementation of end-December 2021 and end-February 2022 quantitative targets and structural benchmarks, as well as overall policy implementation under the SMP.
Keywords:
SMP staff report; SMP implementation; Comoros' Staff-Monitored Program; debt sustainability risk; reform program; Debt sustainability analysis; Arrears; Global
Cover IMF Staff Country Reports
Union of the Comoros: Second Review Under the Staff-Monitored Program-Press Release; and Staff Report
International Monetary Fund. African Dept.
This paper discusses Union of The Comoros’ Second Review under the Staff-Monitored Program (SMP). The implementation of the SMP, which supported the government’s reform program during 2021–2022, was broadly satisfactory, with most quantitative targets and structural benchmarks being met on time. The reported number of coronavirus disease 2019-related cases has remained relatively low. State-owned enterprises (SOEs) incurred substantial losses in 2022 as administered prices were slow to adjust to the surge in global commodity prices, implying lower fiscal revenue, higher public debt, and wider financing gaps over the medium term. Comoros was already facing a high risk of debt distress and substantial financing gaps due to large projects financed by nonconcessional debt and the restructuring of the insolvent state-owned postal bank (SNPSF). The recent deterioration in macroeconomic conditions has further heightened debt sustainability risks. Strong remittances and a resumption of tourism have helped cushion the shock while maintaining an adequate level of foreign reserves. The fallout from the war in Ukraine, however, has set back the expected fiscal gains, underscoring the need for continued fiscal consolidation efforts. IMF welcomes the authorities’ commitment to continuing engagement with the IMF country and technical assistance teams as they push forward the remaining structural benchmark and tackle other structural reforms.
Keywords:
SMP staff report; SMP implementation; Comoros' Staff-Monitored Program; debt sustainability risk; reform program; Debt sustainability analysis; Arrears; Global
Cover IMF Working Papers
Capital Controls in Times of Crisis – Do They Work?
Apoorv Bhargava
,
Romain Bouis
,
Annamaria Kokenyne
,
Manuel Perez-Archila
,
Umang Rawat
, and
Ms. Ratna Sahay
This paper provides an analysis of the use and effects of capital controls in 27 AEs and EMDEs which experienced at least one financial crisis between 1995 and 2017. Countries often turn to using capital controls in crisis: some ease inflow controls while others tighten controls on outflows. A key finding is that countries with pervasive controls before the start of the crisis are shielded compared to countries with more open capital accounts, which see a significant decline in capital flows during crises. In contrast, the effectiveness of capital controls introduced during crises appears to be weak and difficult to identify. There is also some evidence that the introduction of outflow controls during crises is negatively associated with sovereign debt ratings, but that investors may actually forgive with time.
Keywords:
Capital controls; capital outflows; financial crises; inflow control; outflow controls Introduced; outflow control; controls on outflow; tightening control; Capital account; Capital flows; Caribbean; Global