Category Archives: Manual

MF Executive Board Concludes 2014 Article IV Consultation with Algeria

ALGIERS, Algeria, December 12, 2014 — On December 1, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Algeria.

Economic activity has picked up in 2014, with real GDP growth projected to reach 4.0 percent following 2.8 percent growth in 2013. The hydrocarbon sector is expected to expand for the first time in eight years, while nonhydrocarbon growth remains supportive. Inflation has decelerated sharply to 2.1 percent, thanks in part to tighter monetary policy.

Algeria continues to enjoy substantial external and fiscal buffers, but threats to macroeconomic stability are growing. For the first time in nearly 15 years, the current account is expected to record a deficit. Deficits are projected to widen over the medium term, as strong domestic hydrocarbon consumption and lower oil prices weigh on exports, while imports continue to grow, driven by public spending. The export base is undiversified, and Foreign Direct Investment (FDI) is hampered by restrictions on ownership.

The fiscal deficit is expected to widen to over 7 percent due to lower hydrocarbon revenue, a sharp increase in capital expenditure, and continued high current spending. Nonhydrocarbon revenues are below their potential, the wage bill is high, and subsidies and transfers are costly, amounting to about 26 percent of GDP. Fiscal savings are expected to decline for the second consecutive year.

Although Algeria has enjoyed macroeconomic stability, faster and more inclusive growth is necessary to provide enough jobs for the country’s youthful population. Public investment efficiency is low, and private sector growth is hindered by a cumbersome business climate, an underdeveloped financial sector, and limited international integration. Finally, rigidities in the labor market and skills mismatches reduce the impact of economic growth on job creation.

Executive Board Assessment2

Executive Directors welcomed the rebound in economic activity, the further decline in inflation, and the sizeable policy buffers. At the same time, Directors noted increasing vulnerabilities against the backdrop of falling oil prices, from the deterioration of the fiscal and current accounts and the decline in fiscal savings and foreign exchange reserves. They called for prompt action to preserve macroeconomic stability, complemented with broad-based reforms to diversify the economy, enhance competitiveness, and promote inclusive growth and job creation.

Directors underscored the need for sustained fiscal consolidation anchored in credible fiscal rules to address the growing fiscal deficit and ensure fiscal sustainability. They saw scope to increase non-hydrocarbon revenues, by broadening the tax base, strengthening tax administration, and reducing tax exemptions. On the expenditure side, further efforts are needed to contain current spending, including the wage bill, and to gradually replace subsidies with a targeted cash-transfer system to protect the poor. Directors welcomed the authorities’ intention to move to a medium-term budget framework and continue to strengthen public financial management. A few pointed to the merits of establishing a sovereign wealth fund with oil savings aimed at supporting economic stabilization efforts and ensuring intergenerational equity.

Given the risk that inflationary pressures could reemerge, Directors encouraged the monetary authorities to remain prudent and stand ready to increase liquidity absorption and interest rates. They supported increasing the issuance of treasury bills to help mop up liquidity, reducing the need to use the oil savings fund for budget financing while also deepening the capital market. Directors welcomed the planned development of new monetary policy instruments, with Fund assistance, for liquidity management.

Directors agreed that safeguarding external stability is a priority, and requires an effective strategy aimed at diversifying the export base while enhancing the export capacity of the hydrocarbon sector. They recommended greater efforts to increase trade openness, relax restrictions on foreign direct investment, and create a more export-friendly business climate. They also welcomed the authorities’ commitment to allow the exchange rate to reflect fundamentals.

Directors highlighted the importance of broader structural reforms to accelerate private-sector-led growth and further reduce unemployment. These include reforms to improve infrastructure, productivity, and public investment efficiency. Directors also encouraged further efforts to relax labor market regulations, address skills mismatch, and promote female and youth employment. A thorough assessment of active labor market policies would also be useful to assess their overall effectiveness.

Directors welcomed ongoing efforts to further strengthen the stability of the financial sector, including steps recently taken to transition to risk-based supervision and capital requirements under Basel II/III. They looked forward to further progress in implementing the recommendations of the 2013 FSAP. Directors also emphasized the need to improve small- and medium-sized enterprises’ access to finance and address remaining deficiencies in the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework.

SOURCE: International Monetary Fund (IMF)

Statement at the End of an IMF Mission to the Democratic Republic of the Congo

KINSHASA, Dem. Rep. of Congo (DRC) December 12, 2014 — A technical team from the International Monetary Fund (IMF) headed by Norbert Toé visited Kinshasa during December 3–10, 2014. The team reviewed recent economic developments and short-term prospects, updated the macroeconomic framework, and discussed possible themes for the 2015 Article IV Consultation with the Democratic Republic of the Congo (DRC). At the end of the mission, Mr. Toé issued the following statement:

“Despite a challenging external and domestic environment, the DRC’s economy continues to show resilience with positive trends in key macroeconomic indicators. However, it remains highly dependent on the mining sector, which makes it vulnerable to volatile commodity prices.

“Macroeconomic performance remains strong with growth in GDP expected to reach 9 percent in real terms in 2014 and inflation to be below 2 percent. Growth continues to be driven essentially by increases in mining output and, to some extent, higher production in the agricultural sector. The current account position improved marginally with the deficit declining from 11 to 8.9 percent of GDP. Nevertheless, international reserves will be stagnant at their relatively low level. In 2015, growth is expected to continue, supported by the buoyancy of the mining sector and the expansion of agriculture. The main risk to the economic outlook arises from a decline in copper and cobalt prices, which account for about 98 percent of exports of goods and 44 percent of nominal GDP.

“Fiscal developments are characterized by a slight decline in tax revenues. The performance of the value added tax (VAT) remains weaker than expected as a result of the lack of controls. In addition, total spending stagnated in 2014. Consequently, the overall fiscal balance is expected to move from a small surplus of 0.3 percent of GDP in 2013 to a deficit of 1.3 percent of GDP in 2014.

“Preserving a sound and stable macroeconomic framework remains key going forward. Such stability is mainly based on a balanced and credible budget, whose revenue should increase rapidly to meet DRC’s development needs. In this regard, it is important the authorities move rapidly to implement the recommendations of various technical assistance missions aimed at accelerating domestic resource mobilization.

“The reforms implemented to de-dollarize the Congolese economy remain a priority. Several initiatives have already been implemented to start the de-dollarization process. In the coming months, it will be essential to support the recapitalization of the Central Bank of the Congo (BCC) in accordance with international standards. Reforms should also target the development of the financial sector so that it can fully contribute to the financing of the development of the DRC.

“The mission wishes to thank the authorities for their warm hospitality and for their close and constructive cooperation.”

The staff team met with Prime Minister Augustin Matata Ponyo; Deputy Prime Minister and Minister of Budget Daniel Mukoko Samba, Minister Delegate in charge of Finance Patrice Kitebi; Deputy Governor of the BCC, Bondombe Assango, and other senior officials. The mission also met with representatives of the private sector and donors.

SOURCE: International Monetary Fund (IMF)

DESPITE IMPRESSIVE GROWTH ACROSS AFRICA, MORE JOBS NEEDED FOR YOUTH, DEPUTY SECRETARY-GENERAL TELLS REGIONAL ECONOMIC COMMUNITIES

NEW YORK, October 2, 2014: Following are UN Deputy Secretary-General Jan Eliasson’s remarks at the high-level briefing by the African Regional Economic Communities to Member States of the United Nations, in New York today:

First of all, I want to welcome all the high-level representatives of the African Regional Economic Communities present here today. I am honoured to speak to you.

We meet at a turbulent and, at the same time, [a] dynamic time at the United Nations.

This past week has been full of activity — with a strong focus on Africa, ranging from peacekeeping and humanitarian crisis to the serious Ebola epidemic.

I am pleased that today’s gathering will discuss development and the long-term future of the continent in the light of the African Union’s visionary “Agenda 2063″.

Africa has for long and consistently been a top priority for Secretary-General Ban Ki-moon and the entire United Nations System.

We applaud Africa’s remarkable progress. Economic growth is impressive. More African children go to school than ever before. There are great advances on women’s empowerment and gender equality. Participatory governance and institutions are on the rise.

All this has been possible thanks to the leadership and commitment of African Governments, the African Union, the Regional Economic Communities and many other partners. The United Nations is one such partner, not least through the Economic Commission for Africa (ECA). We always stand with Africa.

Regional Economic Communities have shown their unwavering resolve to promote interregional trade, as well as social and economic cooperation. You have also demonstrated an increasing capacity to deal with the root causes of conflict in your respective regions.

There are many examples of progress.

The Economic Community of West African States (ECOWAS) helped to consolidate peace in Mali and the Sahel region. The Economic Community of Central African States is playing a mediating role in the ongoing crisis in Central African Republic.

I also welcome efforts by the Intergovernmental Authority on Development (IGAD) to resolve the situation in South Sudan. The Southern African Development Community (SADC) is working with the International Conference on the Great Lakes Region to implement the Peace, Security and Cooperation Framework for the Democratic Republic of Congo and the Great Lakes Region.

The Secretary-General has convened a number of high-level meetings over the past week relating to Africa. We have seen progress towards some of our common goals. But crises on the continent still threaten lives and undermine development.

The Ebola virus disease presents new and very serious challenges in West Africa.

I commend the efforts of ECOWAS and the African Union in quickly mobilizing resources and awareness to reduce the impact of Ebola. The United Nations has mobilized to a degree rarely seen.

Our Special Envoy and the United Nations Mission for Ebola Emergency Response (UNMEER) are working hard to stop the outbreak, treat the infected, provide essential services, preserve stability and prevent the spread of the disease.

The affected nations and the international community have a joint responsibility to contain and stop the epidemic urgently. The affected countries have a right to expect concrete and immediate acts of solidarity.

The humanitarian and security situations in the Central African Republic and South Sudan remain dire. Northern Nigeria and Somalia continue to face rising terrorist threats from Boko Haram and Al-Shabaab. The political situation in Libya is growing more complex and dangerous. Lesotho is facing a risky political stalemate. All these situations have potential spillover effects on subregions and the continent.

Let us remember that development is both a cause and consequence of peace.

There has been great social and economic progress across Africa. But, as in the rest of the world, its economies have not kept pace with legitimate demands. Above all, we need more jobs, especially for Africa’s young people. Unemployment is not only an economic challenge. It is also a social, psychological and political problem.

Trade among African countries remains limited, mainly because they do not have adequate railways, roads and other infrastructure. Many African economies also lack sufficient economic diversification, productivity and well-functioning institutions. As a result, even though African countries have impressive growth, Africa is still off track to meeting many of the MDGs (Millennium Development Goals).

We are here today to consider how we can do more to reduce poverty and inequalities, improve food and water security, and enable more African mothers and children to live healthy lives. Women’s empowerment is especially important to advancing progress for all. We can unleash enormous energy and gains across Africa if we end discrimination and violence against women and girls — and invest in their future as leaders in all areas of society.

Agenda 2063 offers a way forward for Africa with key regional objectives. The Regional Economic Communities can make the difference between failure and success. Agenda 2063 has a global dimension that must be harmonized with international development trends, particularly the post-2015 agenda.

I congratulate Africa on the Common African Position on the post-2015 development agenda. As the negotiations continue, we will work to ensure that the continent’s concerns are appropriately reflected in the next global development agenda.

The transformative changes envisaged in Agenda 2063 will need to be forged around stronger regional integration. There is tremendous power and potential in intensified regional and interregional cooperation, not least for landlocked countries.

Stronger integration will require increased competitiveness in African economies. The process should also be underpinned by major investments in human development, science, technology and infrastructure.

All this will to a great deal depend on effective governance, and durable peace and security in all parts of the continent.

This meeting provides an opportunity for you as Regional Economic Communities to tell us how you are contributing to Agenda 2063 and how the United Nations can better support your efforts. I also look forward to hearing from our Special Envoys and Special Representatives on how the United Nations System can enhance its cooperation with the Regional Economic Communities and the Member States.

Working together, we can demonstrate that the international community accepts its shared responsibility for Africa. Working hand in hand with Africa will also benefit the world at large, advancing common global goals for peace, development, human rights and human dignity.

Thank you.

SOURCE: UNITED NATIONS

Locust plague in Madagascar halted, but at great risk of resurgence / Achievements of FAO and Government of Madagascar threatened by funding gap

ROME, Italy, October 2, 2014: A locust plague that spread across Madagascar threatening the main staple food crops and pasture in the country has been successfully contained, however, progress is under threat due to a gap in funding, FAO said today.

At the beginning of the plague in April 2012 the highly destructive Malagasy Migratory Locust ravaged crops and pastures on its way from the southwest of the country toward the North. By April 2014, it had spread towards the country’s largest rice crop areas in the northwest and threatened the livelihoods of 13 million people.

Potential for further damage was contained by the first locust control campaign, which is part of a three-year programme jointly executed by FAO and the Government of Madagascar, in close collaboration with the Ministry of Agriculture and Rural Development.

“The effects of this plague could have been devastating, but thanks to strong efforts by the Government of Madagascar, supported by FAO, we have succeeded in preventing these locusts from migrating even further,” said David Phiri, FAO’s Subregional Coordinator for Southern Africa.

Protected crops

Since locust control actions began in September 2013, large-scale areal operations allowed to survey over 30 million hectares of land and control locust populations on over 1.2 million hectares.

A total of $28 million has been donated so far by the Governments of Austria, Belgium, France, Italy, Japan, Madagascar through a World Bank loan, Norway and the United States of America as well the European Union and the United Nations Central Emergency Response Fund. Donors also include Algeria, Mauritania and Morocco, which donated pesticides.

Preliminary results of an FAO/WFP assessment mission, conducted between mid-June and mid-July 2014 in collaboration with the Ministry of Agriculture and Rural Development, indicate that the first anti-locust campaign prevented larger damage to crops and pastures and protected the large rice producing regions of the country located in the centre and north.

This first campaign also provided the opportunity to further strengthen national capacities in locust management.

“Despite great support and achievements, however, we now face a new challenge due to a gap in funding,” says Phiri.

More funds needed

Funds available so far are only sufficient to implement the first part of the second locust control campaign, which started in September 2014. With the onset of the rainy season, from October 2014 onwards, the locust situation will deteriorate as seasonal temperatures and humidity at this time are ideal breeding conditions for the locust. The second and third campaigns are imperative to respectively support the decline of the plague and the return to a situation of recession.

Additional support of $14.7 million is urgently needed for aerial surveys, control operations, equipment, pesticides, as well as the recruitment of key staff to carry out the second and third campaigns.

“Each day is a fight to feed our children and send them to school,” says Hantanirina Florentine, who lives in a village near Sakaraha in central Madagascar. “Our main source of income is our 100 square metre plot of land and my husband’s odd jobs. The locust plague affected our livelihood and made our daily life even harder. The locust plague needs to be put to an end, so we can have crops and protect our livelihoods.”

Without added funding, efforts made during the first campaign will be largely lost and the locust plague will expand again. The context was similar in 2010/11 and 2011/12 when the funding for two anti-locust campaigns was not made available and as a result, the current plague developed.

“An immediate food crisis has been avoided,” says Phiri, “but an economical and humanitarian crisis could still threaten Madagascar if the two next campaigns are not implemented in time.”

“We are in a position to help – we just need one last push to stop this disaster and prevent future plagues.”

According to, Roland Ravatomanga, Minister for Agriculture and Rural Development of Madagascar, “The first locust phase was successful thanks to the support of technical and financial partners, but much remains to be done for the second phase in 2014 and 2015. I solemnly appeal to the International Community on behalf of the Government and the Malagasy people for financial and material support to Madagascar. The food and nutrition security of Madagascar depends on it.”

SOURCE: Food and Agriculture Organization of the United Nations (FAO)

Ebola virus disease – United States of America

GENEVA, Switzerland, October 2, 2014: Disease Outbreak News

1 October 2014

On 30 September 2014, the Pan American Health Organization / World Health Organization (PAHO/WHO) was informed of the first confirmed imported case of Ebola Virus Disease (EVD) in the United States.

The case is an adult with recent travel history to West Africa who developed symptoms compatible with Ebola on 24 September 2014, approximately four days after arriving in the United States on 20 September 2014. The patient did not have symptoms when leaving West Africa. The case sought medical care on 26 September 2014 and was admitted into isolation on 28 September 2014 at Texas Health Presbyterian Hospital in Dallas.

Samples were sent for testing to the US Center for Disease Control and Prevention in Atlanta, Georgia and at the Texas state laboratory. Results were positive for Ebola virus.

Identification of close contacts for further daily monitoring for 21 days after exposure is under way. Given that the case did not exhibit symptoms of Ebola during the flights from West Africa, contact tracing of people on the same commercial airline flights is not indicated.

Future WHO updates on EVD in the United States will not be posted on the Disease Outbreak News. Further information will be available in WHO’s Ebola Situation Reports which provide regular updates on the WHO response: http://www.who.int/csr/disease/ebola/situation-reports/en/

More information on this case is available at:

• Texas Department of State Health Services news release: https://www.dshs.state.tx.us/news/releases/20140930.aspx

• CDC website: http://www.cdc.gov/media/releases/2014/s930-ebola-confirmed-case.html

WHO does not recommend any travel or trade restrictions be applied by countries except in cases where individuals have been confirmed or are suspected of being infected with EVD or where individuals have had contact with cases of EVD. Contacts do not include properly-protected health-care workers and laboratory staff.

Temporary recommendations from the Emergency Committee with regard to actions to be taken by countries can be found at IHR Emergency Committee on Ebola outbreak in West Africa.

SOURCE: World Health Organization (WHO)