Republic of Kosovo: Request for Stand-By Arrangement
Author: International Monetary Fund. European Dept.
Publication Date:
31 Jul 2015
eISBN:
9781513541020
Language:
English
Keywords:
ISCR; CR; growth potential; Kosovo; emergency liquidity assistance framework; government; Kosovar authorities; policy; balance of payments; net bank financing; private sector; exchange rate; fiscal policy; Fiscal rules; Public sector wages
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EXECUTIVE SUMMARY Key issues: Kosovo faces the dual challenge of maintaining fiscal credibility and debt sustainability while shifting its growth model from one driven by remittances and consumption to one driven by investment and the tradable sector. This requires fiscal consolidation over the next two years that deflates unproductive current spending while increasing space for critical public investment and donor-financed capital projects. It also requires steps to further preserve financial stability, improve competitiveness, remove structural impediments to bank lending, and reduce corruption. Stand-By Arrangement (SBA): The authorities have requested a 22-month, SDR 147.5 million (250 percent of quota) SBA. An initial purchase of SDR 28.1 million would become available upon approval of this request. The program will seek to preserve low debt and financial stability and rebuild government bank balances while creating conditions for more dynamic and better-balanced growth. Specifically, policies would aim at: • Strengthening public finances through fiscal consolidation, with the deficit path within the fiscal rule’s limits. This will be supported by steps to improve budget composition and deflate unproductive current spending. Capital expenditure will be protected and even enhanced through the modification of the investment clause under the fiscal rule. A new debt limit will ensure that debt remains sustainable. • Advancing financial sector reforms related to emergency liquidity assistance and risk-based supervision to bolster financial sector stability. • Raising Kosovo’s long-term growth prospects. Reforms will include the introduction of a public wage bill to boost competitiveness, a new public procurement process to improve the business environment, and steps to catalyze donor-project financing related to Kosovo’s large development needs.

Abstract

EXECUTIVE SUMMARY Key issues: Kosovo faces the dual challenge of maintaining fiscal credibility and debt sustainability while shifting its growth model from one driven by remittances and consumption to one driven by investment and the tradable sector. This requires fiscal consolidation over the next two years that deflates unproductive current spending while increasing space for critical public investment and donor-financed capital projects. It also requires steps to further preserve financial stability, improve competitiveness, remove structural impediments to bank lending, and reduce corruption. Stand-By Arrangement (SBA): The authorities have requested a 22-month, SDR 147.5 million (250 percent of quota) SBA. An initial purchase of SDR 28.1 million would become available upon approval of this request. The program will seek to preserve low debt and financial stability and rebuild government bank balances while creating conditions for more dynamic and better-balanced growth. Specifically, policies would aim at: • Strengthening public finances through fiscal consolidation, with the deficit path within the fiscal rule’s limits. This will be supported by steps to improve budget composition and deflate unproductive current spending. Capital expenditure will be protected and even enhanced through the modification of the investment clause under the fiscal rule. A new debt limit will ensure that debt remains sustainable. • Advancing financial sector reforms related to emergency liquidity assistance and risk-based supervision to bolster financial sector stability. • Raising Kosovo’s long-term growth prospects. Reforms will include the introduction of a public wage bill to boost competitiveness, a new public procurement process to improve the business environment, and steps to catalyze donor-project financing related to Kosovo’s large development needs.

Context

1. Kosovo has enjoyed financial stability as well as more resilient economic growth than other Western Balkan countries. Steady remittance inflows from the Diaspora in Germany, Switzerland, and other advanced European economies have helped support average growth of 3.3 percent over the past five years. But these remittances have driven consumption and investment mostly in the non-tradable sector and, without a well-established productive and export base, imports. Kosovo’s resulting trade deficit is very large, at about 30 percent of GDP.

2. Absent reforms, medium-term growth would be insufficient to meaningfully lift incomes and improve subpar labor outcomes. Given a young and growing population, growth of about 3½ percent would not be enough to lift per capita income of about €3,000 (among the lowest in Europe) toward the Western Balkans average, much less toward the rest of Europe. This level of growth would likewise not generate enough jobs to dent very high unemployment (30 percent, and even higher among women and youth). Competitiveness is hampered by high labor costs and an overvalued (by about 15–20 percent) real exchange rate; infrastructure gaps remain large; bank credit does not sufficiently support investment and growth; and persisting perceptions of corruption undermine recent de jure improvements in the business environment.

A01ufig1

Kosovo GDP per capita as ratio of EU countries and EU Candidate Countries average

Citation: IMF Staff Country Reports 2015, 210; 10.5089/9781513541020.002.A001

Sources: World Economic Outlook; national authorities.
A01ufig2

Labor Market Indicators

(percent)

Citation: IMF Staff Country Reports 2015, 210; 10.5089/9781513541020.002.A001

Source: National authorities.

3. There is now political support for reforms to lift Kosovo’s growth potential. Following June 2014 elections and protracted negotiations, a grand coalition that includes Kosovo’s two largest political parties was formed in December 2014. The government enjoys a comfortable majority in parliament. The next parliamentary elections are provisionally planned for 2018.

Recent Developments

4. Economic growth waned in 2014. Despite steady remittance inflows and a large preelection increase in wages, staff estimates that growth slowed to 2.7 percent last year from 3.4 percent in 2013. Culprits include a six-month political stalemate that dented confidence and spending, together with the prolonged shutdown of the main energy plant, which was bridged by power cuts and higher electricity imports. Low international and euro area prices kept inflation low (0.4 percent on average). The current account deficit (including official transfers) widened from 6.4 to 8.0 percent of GDP despite strong export growth (from a low base), as import volumes rose in line with low import prices, large pre-electoral wage increases, and the closure of the power plant. Financing sources—which come mainly from the Diaspora in Western Europe—remained stable.

5. Fiscal policy deteriorated in 2014, threatening the credibility of the fiscal rule and eroding space for productive spending. The government increased public sector wages and pensions by 25 percent ahead of elections, promised new benefits for war veterans and political prisoners, signed a generous collective agreement on labor relations, and introduced a health insurance law. This sharp increase in current spending was balanced by 2 percent of GDP in capital underspending to limit the deficit (excluding PAK spending) to 2.5 percent of GDP, within the fiscal rule’s margin.1

6. The authorities face a challenging fiscal environment this year. The 2015 budget—drafted by a caretaker government during the prolonged political transition last year—relies on overly optimistic revenue assumptions. With more realistic revenue assumptions, combined with the full-year effect of 2014 pre-electoral promises and a ramp-up in highway spending, staff estimates that the deficit would reach 3.9 percent of GDP in 2015, even after several measures already taken by the authorities earlier this year to rein in the deficit.

7. In addition, the budget’s worsening composition constrains infrastructure and development plans. Absent corrective measures, staff expects current spending to increase by 4.4 percentage points of GDP over 2011–15, largely due to the wage bill (2.7 percentage points of GDP) and subsidies and transfers (1.6 percentage points of GDP). Public sector wages have more than doubled since independence in 2008, significantly outpacing productivity, private sector wages, and public wages in other Western Balkan countries. Capital spending has been substantially cut between 2011 and 2015 (by 2.9 percentage points of GDP) to accommodate this sharp increase, drawing resources away from Kosovo’s urgent development needs.

8. At the same time, the government’s bank balances (bank balances) have fallen below prudent levels. These bank balances—a critical buffer for a unilaterally euroized economy without its own currency—currently stand at 1.8 percent of GDP, well below the 4.5 percent level considered prudent by staff and enshrined in the fiscal rule.

9. While banks are generally sound, bank intermediation remains limited. Kosovo’s banks are well capitalized (with an aggregate capital adequacy ratio of 19 percent), liquid (liquid assets cover 41 percent of short-term liabilities), and profitable (the system’s return on average assets was 2.4 percent in April). The NPL ratio is falling (now below 8 percent) and NPLs are well provisioned. Credit growth has picked up in recent months, although at 6.3 percent y/y in April, it remains modest for a country with relatively low credit penetration (35 percent of GDP). Roughly two-thirds of the banking sector’s total loan portfolio is comprised of corporate loans, with a heavy focus on trade, while one-third is comprised of household loans, although the household segment is currently growing at a notably faster rate (about 11 percent y/y) than total loans.

The Fund-Supported Program

A. Program Objectives

10. The program’s dual objectives are to (i) maintain macrofinancial stability by shoring up fiscal policy, rebuilding government bank balances, and enhancing the financial sector’s regulatory and supervisory frameworks; and (ii) boost competitiveness and productive capacity to achieve stronger and better-balanced growth through structural reforms. The program will seek to keep the budget deficit path—excluding new donor-financed projects (see below for details)—within the fiscal rule while improving the composition of the budget. This will ensure debt sustainability, contain unproductive current spending, and allow space for much-needed priority spending. Purchases under the SBA will cover Kosovo’s financing needs over 2015–17 and rebuild government bank balances back to adequate levels (of 4.5 percent of GDP). The program will support the central bank’s efforts to improve its emergency liquidity assistance (ELA) and supervisory frameworks, further enhancing macrofinancial stability. The program will also target several areas to improve competitiveness and bolster growth, including via deflating excessive labor costs, catalyzing donor-financed infrastructure investment, addressing structural impediments to credit provision, and improving the business environment.

B. Macroeconomic Framework

11. The program is based on the following macroeconomic framework:

  • Real GDP growth in 2015 is projected at 3.2 percent. The improvement over 2014 is driven by stronger momentum on remittances, the full-year impact of last year’s large wage increases, and a ramp up in highway construction, but it is tempered by nominal wage freezes in the public sector this year. Over the medium term, staff expects growth to gradually increase to 4.1 percent, helped by stronger investment and export growth as donor-financed capital projects and measures to improve competitiveness begin to bear fruit. In addition, the newly-agreed Brezovica tourism project is expected to boost real investment growth in 2016–18 (averaging 7.3 percent per year) and, once it is operational, exports of services as well.

  • Consumer price inflation is projected at 0.1 percent for 2015, influenced by the low-inflation environment in the euro area, as imports from these countries comprise a very large portion of Kosovo’s CPI basket. Staff expects inflation to gradually rise to around 2 percent in subsequent years, in line with a policy-supported price recovery in the euro area and global commodity price developments.

  • The current account deficit, including official transfers, is expected to narrow marginally to 7.9 percent of GDP in 2015, as stronger momentum in remittances is partially compensated by higher imports. Beyond 2015, the current account deficit (including official transfers) is projected to temporarily widen to 10.3 percent of GDP in 2016, as the Brezovica resort and new donor-financed projects trigger a spike in imports. Subsequently, the current account should steadily narrow in the medium term (to 8.6 percent by 2020) as projects are completed and exports rise as operations begin. Non-debt creating flows should remain the primary financing items, with FDI projected to average around 5.3 percent through the forecast period. Including Fund disbursements, reserves are expected to remain sufficient at 3.5 months of imports, on average.

C. Fiscal Policy

12. The program will ensure that the budget deficit remains within the bounds of the fiscal rule, maintaining debt sustainability, while improving budget composition and providing space for critical capital projects. The general government deficit will be targeted to comply with the fiscal rule, and adjustment will focus on improving budget composition. Staff expects the deficit to average 1.8 percent of GDP over 2015–17, excluding new, yet to be determined donor-financed capital projects (see below for more detail).

13. This includes significant measures this year to bring the 2015 deficit down from 3.9 percent (without further corrective measures) to 2.4 percent. In addition to the March increases in excises on alcohol and tobacco, the authorities will carry out additional adjustment this year through new tax measures as well as a series of actions focused on deflating current expenditures (see text table). Capital expenditures would be preserved. A revised mid-year budget will be approved by parliament as a prior action for the program, and include (MEFP ¶6):

  • An increase in the standard VAT rate from 16 to 18 percent. The rate increase will come with a reduction to 8 percent for a limited category of goods but is still expected to yield about 0.2 percent of GDP in additional revenues.2

  • Additional excise increases that will yield another 0.15 percent of GDP.

  • A reduction in the wage bill by 0.4 percent of GDP relative to the 2015 budget, partly by not filling vacancies.

  • Savings on transfers to yield 0.2 percent of GDP.

  • A reduction in the goods and services allocation relative to the 2015 budget to yield another 0.2 percent of GDP.

Fiscal Measures to Reach Program Targets

(Percent of GDP)

article image

These estimates are provisional until discussion of the 2016 budget.

Revenue losses may be lower as the Stabilization and Association Agreement with the EU has not been ratified yet.

Minus denotes savings.

The 2015 budget already froze nominal wages, hence no savings in 2015 relative to pre-program commitments.

These postponements do not incur retroactive obligations.

14. Measures will also be taken to ensure revenues due by the privatization agency. The government has committed, as a structural benchmark under the program, to submit to parliament candidates to fill the Board of the Privatization Agency of Kosovo (PAK) (structural benchmark, MEFP ¶8) to enable the transfer of 0.3 percent of GDP in funds owed by PAK to the Tax Administration of Kosovo.3

15. The authorities will continue to improve the direction and composition of fiscal policy post-2015. For 2016, the program envisages further adjustment by 0.8 percent of GDP, to arrive at a deficit excluding new donor-financed projects of 1.6 percent. The authorities plan to achieve this via additional improvements to budget composition, particularly by reducing the weight of current spending relative to 2015 levels. In 2016, current expenditure will fall by 0.4 percent of GDP, helped by a continued freeze in wage levels. The annualized impact of the 2015 revenue measures noted above will also support adjustment. At this stage, staff estimates that an additional ½ percent of GDP in measures will need to be identified and incorporated in the 2016 budget to be prepared in October, so as to reach the 1.6 percent target. As for 2017, marginal adjustment would then deliver an average underlying deficit of 1.8 percent over the program period.

16. The program will also restore government bank balances to an adequate level. The combination of fiscal adjustment and Fund disbursements will bring bank balances back to 4.5 percent of GDP by 2016, thereby filling the corresponding balance of payments gap. Balances are expected to remain at this level for the following years.

17. The above policies will ensure that Kosovo remains on a sustainable debt path. Public debt is expected to increase moderately over the course of the program, peaking at 28.3 percent of GDP in 20204,5 as major donor-financed projects are taken up (see below). The program includes safeguards, including the fiscal rule and a new debt limit, to ensure that debt remains sustainable (see paragraph 24 for more detail).

D. Financial Sector

18. Financial sector measures under the program will focus on strengthening the financial safety net and bank supervisory framework. The authorities have made good strides in recent years—with the support of Fund technical assistance—to improve the financial sector’s regulatory and supervisory framework. The Fund-supported program will help close some of the remaining gaps.

19. Finalizing a strong ELA framework is critical for a euorized economy. Without its own currency, the central bank (CBK) has limited capacity to act as a lender of last resort for Kosovo’s banks. As discussed in the recent Article IV staff report, the CBK has sufficient ELA reserves to cover both of Kosovo’s domestic banks in the event of a severe liquidity shock. In addition, letters from parents of foreign subsidiaries provide additional comfort in the context of a banking sector that is 90 percent foreign-owned by assets. However, Kosovo still needs to move toward an ELA legal framework in line with international best practice. The CBK has committed to adopting a new ELA regulation (structural benchmark, MEFP ¶12), and is currently incorporating refinements to the draft regulation in consultation with Fund staff so as to ensure the final draft meets best standards.

20. Fully adopting risk-based supervision will strengthen financial stability. With the help of Fund technical assistance, the authorities have made good progress in recent years in gradually moving toward risk-based supervision, which will help the CBK conduct better surveillance of banks and better identify risks. Under the program, the CBK will conduct on-site examinations under these new procedures (including post-examination reports) at all banks supervised by the CBK, so as to have fully adopted risk-based supervision by early 2016 (structural benchmark, MEFP ¶12).

21. Development of a macroprudential policy toolkit and crisis management body are also important elements of macrofinancial stability. The program will closely monitor the authorities’ efforts to further develop the recently created Macroprudential Advisory Committee—the CBK plans to formally adopt a policy framework, develop indicators, and begin reporting to the CBK Board later this year—and to fully institutionalize the National Committee for Financial Stability and Crisis Management.

22. The program will also seek to address structural obstacles to bank lending to help the banking sector better support economic growth. Credit penetration in Kosovo (35 percent of GDP) remains the lowest in the Western Balkans despite banks’ ample liquidity. This is partly related to Kosovo’s weak business environment, underdeveloped private sector, and limited business opportunities. However, structural impediments—such as inefficient court processes and difficult debt collection procedures—contribute to high interest rate spreads (currently at 750 bps, although on a downward trend) and collateral requirements. The authorities are already engaged in several initiatives to alleviate these supply-side bottlenecks, including increased training for judges and court staff that deal with commercial cases; work undertaken in conjunction with USAID to reduce the large backlog of outstanding court cases; refinements to the recently-introduced system of private collection agents, which has already helped with enforcement and debt collection; and a new draft bankruptcy law to improve the liquidation and administration process, particularly with regard to SMEs. These, and other initiatives, will be monitored under the program. In addition, in the coming months, Fund staff will undertake a comprehensive diagnostic of legal and structural impediments to credit provision in Kosovo, assess the initiatives currently underway, and identify any areas beyond those already being addressed that might help to further alleviate such obstacles.

A01ufig3

Western Balkans Credit Depth

(credit/GDP; MNE 2013, HRV 2012)

Citation: IMF Staff Country Reports 2015, 210; 10.5089/9781513541020.002.A001

E. Competitiveness and Structural Reforms

23. The program will support a prudent increase in fiscal space for needed development projects. The authorities have requested the modification of the investment clause of the fiscal rule to accommodate additional targeted and much-needed infrastructure spending on high-priority areas. The investment clause currently stipulates that the government can use privatization proceeds to finance capital projects above the 2 percent deficit ceiling (i.e., the excess over 2 percent is not counted as an excessive deficit), if (i) budget commitments are consistent with a deficit of 2 percent of GDP or less; and (ii) bank balances are at least 4.5 percent of GDP. This clause is currently of limited practical value as privatization receipts are low and there are no assets that can be immediately privatized. With technical support from the Fund, the authorities plan to modify this clause to allow for new donor-financed capital projects, in addition to privatization-financed projects, to not count as an excessive deficit against the fiscal rule.

24. Safeguards will ensure good use of fiscal space and preserve debt sustainability:

  • Good use of fiscal space. By design, additional spending allowed by this modification will be aimed towards needed capital spending. Moreover, as these will be donor-financed projects, their robust vetting processes will ensure that the projects are of high quality and are targeted at priority development areas. In addition, Kosovo’s constitution requires that all external borrowing, including donor-funded projects, be approved by parliament with a two-thirds majority. To enhance parliamentary oversight, the Ministry of Finance will submit to parliament semiannual reports on all new projects for information, detailing the projects’ rationale, expected cost, and financing terms (structural benchmark, MEFP ¶22). Finally, limits on current spending under the program (see above), together with the planned wage rule (see below), will prevent the substitution of government-financed capital spending for current spending.

  • Safeguards. By design, no spending under the investment clause can take place unless the underlying deficit is below 2 percent of GDP and government bank balances are above 4.5 percent of GDP, thereby ensuring that any additional spending takes place from a strong starting position.

  • Debt sustainability. The amendment to the clause will specify that no new donor-financed project will be allowed under the clause if it would cause public debt to exceed 30 percent of GDP. In this case, only privatization-financed (i.e., non-debt creating) projects would be allowed above the fiscal rule’s deficit ceiling.

  • Sunset clause. To reinforce credibility, a sunset clause will be put in place on the changes. Given the long lead time required for large-scale investment projects, the sunset clause will specify that the changes will expire in 10 years.

25. Planned projects are only at the concept stage. Given significant potential in agriculture, the authorities are considering two large irrigation projects which, together, could significantly scale up arable land under irrigation. Other projects under consideration include IT modernization in schools and universities, and upgrades to both the road and rail networks that would facilitate intraregional commerce.

26. A public sector wage bill will be introduced to ensure that wage developments are aligned with economic developments. Strong remittance inflows, while helpful in smoothing consumption and stabilizing growth, have pushed reservation wages beyond levels that domestic productivity can sustain. Moreover, unrestrained public sector wage increases have compounded the problem of high labor costs: today, the positive gap between public and private sector wages makes it difficult for the private sector to attract and retain the talent it needs to compete. Staff estimates the price competitiveness gap (real exchange rate overvaluation) at 15–20 percent. And, as a euroized economy, any increase in cost competitiveness must come via a deflation in real labor costs. As such, the program will introduce a public wage rule that will link growth in the public wage bill to an easily-monitorable macroeconomic indicator, to prevent large discretionary increases in public sector wages as seen in the past (typically before elections).6 A rule will be approved this year but not adopted in the 2016 budget (structural benchmark, MEFP ¶17). Given the large share of public employees in the workforce, the combination of ongoing nominal wage freezes and, later, the introduction of this rule should help deflate unit labor costs.

A01ufig4

Trends in Average Public and Private Sector quarterly wages1/

(Euros)

Citation: IMF Staff Country Reports 2015, 210; 10.5089/9781513541020.002.A001

1/ 2014 data on private sector wages is preliminary. Series calculated based on projected GDP per capita growth.
A01ufig5

Projected Public Sector Wage Deflation

(public wages per GDP per capita; 2014 = 100)

Citation: IMF Staff Country Reports 2015, 210; 10.5089/9781513541020.002.A001

27. Reforms to the public procurement process will reduce corruption and improve the business environment. While Kosovo has improved its rankings in the World Bank’s Doing Business and governance indices in recent years, widespread perceptions of corruption remain, further holding back the development of a more robust private sector. The program will target reforms to the public procurement process as part of the authorities’ efforts to reduce corruption, since the government is a key economic actor in Kosovo. The authorities recently passed a general procurement law in line with international best practice that provides a good starting point for improving the procurement process. However, the actual procurement of common goods by centralized means within the government has not yet been implemented. As such, the program will support the finalization of the first centralized tendering bid for fuel and other major common goods for 43 central government procurement units,7 in line with the processes set forth in the new law, this year (structural benchmark, MEFP ¶20). This will cover the needs of these units for the next three years, with the list of goods and services to fall under the new system to be expanded over 2016 (structural benchmark, MEFP ¶20). Municipalities and publicly-owned enterprises will also gradually be brought into this new system. The program will also facilitate the adoption of a draft law to make e-procurement mandatory for all central government agencies—which will also help to ensure better oversight of the process—by the second review (structural benchmark, MEFP ¶20).8

28. To further strengthen the AML/CFT regime, the staff will encourage Kosovo to undergo a comprehensive AML/CFT assessment against the revised 2012 FATF standard.

Program Modalities

29. The SBA will fully cover Kosovo’s balance of payments need over 2015–17. Staff estimate the external financing gap at SDR 147.5 million (equivalent to €184 million, 250 percent of quota, and 3.1 percent of GDP) for 2015–17. Fund financing would fully close this gap. As part of this, government bank balances would increase to prudent levels by the end of 2016 and remain at that level over the medium term. From the second review onwards, staff envisions semi-annual reviews with end-December and end-June targets (see Table 9). The first review (end-August 2015 test date) would not follow this semi-annual pattern as its timing would be determined by the 2016 budget cycle.

Table 1.

Kosovo: Main Indicators, 2012–20

(Percent, unless otherwise indicated)

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Sources: Kosovo authorities; and IMF staff estimates and projections.Note: Forecasts are based on staff’s understanding of current policies, not on a reform scenario.

Projected balance in the Article IV does not conform with the fiscal rule, but the projected balance in the SBA does.

Donor projects have not been fully identified yet, nor donor financing agreed upon.

Total foreign assistance excluding capital transfers.

This debt is neither recognized nor serviced by Kosovo.

Series updated according to Kosovo Agency of Statistics (2013), Pristina, Kosovo.

Table 2.

Kosovo: Consolidated Government Budget, 2012–201/

(Excluding donor designated grants; millions of euros; cumulative from the beginning of the year)

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Note: Forecasts are based on staff’s understanding of current policies, not on a reform scenario.

Does not yet reflect the GFSM 2001 methodology.

Including capital transfers to public enterprises.

New donor projects have not been fully identified yet, nor donor financing

This debt is neither recognized nor serviced by Kosovo.

Table 3.

Kosovo: Consolidated Government Budget, 2012–20

(Excluding donor designated grants; percent of GDP)

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Sources: Kosovo authorities; and IMF staff estimates and projections.Note: Forecasts are based on staff’s understanding of current policies, not on a reform scenario.

New Donor projects have not been fully identified yet, nor donor financing agreed upon.

This debt is neither recognized nor serviced by Kosovo.

Table 4.

Kosovo: Balance of Payments, 2012–20

(Millions of euros, unless otherwise indicated)

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Sources: Kosovo authorities; and IMF staff estimates and projections.Note: Forecasts are based on staff’s understanding of current policies, not on a reform scenario.

Including trading companies, insurance companies, and pension funds.

Includes SDR allocations and IMF account at historical value.

Projections of errors include unidentified private remittances and other capital based on average historical levels.

Table 5.

Kosovo: Central Bank and Commercial Bank Survey, 2012–15

(Millions of euros, unless otherwise indicated)

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Note: Forecasts are based on staff’s understanding of current policies, not on a reform scenario.

Includes shares and other equity.