Mexico has some fiscal space and enjoys comfortable market access that could be used during these difficult times: a. They predict that inflation is likely to increase while terms of trade and capital outflows will make our external position more vulnerable. Concluding the association agreement with the EU would simplify procedures for domestic firms and support their expansion into new markets. Attracting bank ownership participation by reputable banking groups and selling non-performing loans (NPLs) and banks’ real estate portfolios to strategic investors would also support liquidity in the system. Is An Amada Partnership For You? The external position is weaker than implied by fundamentals and desirable policy setting. In concluding the Article IV consultation with the Republic of San Marino, Executive Directors endorsed the staff’s appraisal as follows: Banking sector weaknesses continue to pose stability risks and hinder economic recovery. What is essential is that they are kept to a minimum and that they are operated with a high level of transparency. Download Vanguard News App. The border closure decision has more to do with national security than international economics. The current policy of guaranteeing cumulative retail price growth below inflation disproportionally helps the well off and should be reconsidered. But, when the time... By Dele Sobowale NOTE: A different article was planned for today. WASHINGTON, DC – April 2, 2020 On March 27, 2020 the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with the Republic of San Marino and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis2 (see below an important note on the timing of the report which precedes the outbreak of COVID-19).3. But these are inevitable, until when local producers respond to new opportunities. The IMF team also took strong exceptions to the continuing border closure which they believe is harming the economies of our neighbours. The recent general elections and establishment of a four-party coalition government provides an opportunity to build a broad consensus for the necessary reforms. c. Businesses. The CBSM should further enhance its liquidity management, including by aligning the ELA framework with international best practice, and restrict budget financing to only exceptional needs and on a temporary basis. Another factor that perhaps the Fund team did not mention is, of course, the 50 percent hike in the VAT tax. Fear and uncertainty have been dampeners on agrarian production, hence the phenomenon of shortages and scarcity that translates into higher inflation pressures. As a result of these developments, the Fund has announced that they are cutting back on their growth forecast for 2020; revising it downwards to 2.0 percent from an earlier figure of 2.5 percent. The authorities have consented to the publication of this statement. The rule in terms of global best practices is that such overdraft facilities must be kept to a minimum. Although inflation levels and volatility have declined following the introduction of inflation targeting, inflation and inflation expectations have remained somewhat above target. Steps to remove supply-side bottlenecks and increase economic integration would promote sustained growth. How are we sure that we are not just printing money for dubious pork-barrel expenditure? 13. Is Now A Good Time For Your Clients To Refinance? On the border issue, I am of the view that the Fund has no business interfering in matters of national security. Significant deposit outflows and weak risk management have left the banking system with low liquidity, poor asset quality, and considerable recapitalization needs, while multiple bank failures and continued state support to the banking system have eroded government liquidity buffers and led to an excessive and unsustainable accumulation of the implicit public debt. The high uncertainty around the extent and length of the COVID-19 spread, the current lack of external market access, and the limited central bank liquidity buffers suggest that the balance of risks is heavily tilted to the downside. The border closure was bound to trigger certain temporary price shocks. A Nigerian newspaper and Online version of the Vanguard, a daily publication in Nigeria covering Nigeria news, Niger delta, general national news, politics, business, energy, sports, entertainment, fashion,lifestyle human interest stories, etc. However, domestic reform reversals that weighed on investment before the pandemic have continued (e.g., in the energy sector and cancelation of some large private investments), potentially weakening the recovery and limiting gains from USMCA, including the on-shoring of supply chains to North America. The announcement of a credible medium-term tax reform would increase the space for providing near-term fiscal support and is an imperative for helping close fiscal gaps, lower public debt, and finance public investment and social spending. b. Shifting the economy to a higher medium-term growth path requires implementation of a coherent and credible strategy that restores banking system viability, ensures fiscal sustainability, and addresses structural impediments. Moreover, passive and active labor market reforms to tackle informality would be a timely complement to the proposed pension reform (see for example IMF WP/19/257 and SDN/19/04).