2023-12-06-IMF-圣马力诺共和国_2023_年第四条磋商-新闻稿；_员工报告；_以及圣马力诺共和国执行主任的发言-英-85页_85页_3mb

Summary of the 2023 Article IV Consultation with the Republic of San Marino

Core Content

The Republic of San Marino underwent a 2023 Article IV consultation with the IMF, which assessed its economic performance, risks, and policy priorities. The consultation concluded on November 17, 2023, following discussions with San Marino officials from September 16–29, 2023. The report highlights the resilience of San Marino's economy despite external shocks and higher interest rates, driven by prudent fiscal policies, access to international capital markets, and strong external demand.

Main Economic Developments

• Growth Resilience: San Marino's economy has shown resilience to recent external shocks, including the pandemic and the Russia-Ukraine war. Real GDP growth was 14.2% in 2021, and the unemployment rate dropped to 4.0% in 2023, the lowest since the global financial crisis.
• Inflation Trends: Inflation has remained high, with headline inflation at 5.9% in 2023, driven largely by imported inflation from Italy, particularly in food and utility prices. Core inflation has persisted due to these external factors, while second-round effects have been moderate.
• External Position: The current account surplus reached 8% of GDP in 2022, supported by strong external demand and a competitive manufacturing sector. However, international reserves declined due to reallocation of funds abroad in search of higher yields.
• Financial Sector: The financial sector remains vulnerable, with elevated nonperforming loans (NPLs) and high operational costs. The nonfinancial sector, however, has experienced a recovery, with GDP recovering to pre-GFC levels and a strong labor market.

Key Risks and Challenges

• Downside Risks: These include weakening global demand, further monetary tightening, and political uncertainty due to upcoming elections. The financial sector's vulnerabilities and potential for higher volatility due to San Marino's microstate status also pose risks.
• Upward Risks: The underlying strength of the manufacturing sector and healthy private sector balance sheets offer some upward potential for growth.

Policy Recommendations

• Fiscal Reforms: The government needs to continue fiscal consolidation, including broadening the income tax base, introducing a VAT, and improving the efficiency of public spending. Efforts should also focus on developing a medium-term fiscal and debt strategy.
• Banking Sector Reforms: The financial sector must be restructured to improve profitability and capitalization. A credible capitalization plan is needed to address undercapitalization resulting from the NPL securitization process. The Asset Management Company (AMC) should be governed effectively to minimize implementation risks.
• Structural Reforms: Enhancing labor market flexibility, improving the insolvency framework, and finalizing the EU Association Agreement are critical for long-term growth and macroeconomic stability.
• AML/CFT and Governance: Strengthening the AML/CFT framework and aligning the bank resolution framework with European standards are essential for financial sector stability.

Economic Indicators (2018–2023)

Main Points

• Resilience: San Marino's economy has shown resilience despite external shocks, supported by prudent policies and strong external demand.
• Fiscal Position: The fiscal position has improved significantly from a weak pre-COVID starting point, with a focus on reducing debt to below 60% of GDP by 2028.
• Financial Sector: The financial sector is in a crisis, with NPLs at 53.1% of GDP in 2023, but the nonfinancial sector is recovering.
• Labor Market: The labor market remains tight, with low unemployment and a strong demand for skilled labor. Cross-border employment has helped alleviate some shortages.
• External Factors: The economy benefits from strong external conditions, including a competitive manufacturing sector and favorable trade relations with Italy.
• Future Outlook: Growth is expected to slow toward its potential, with inflation remaining elevated but declining in line with Italian trends. Political and financial risks remain a concern.

Conclusion

The IMF Executive Board welcomed San Marino's resilience to recent external shocks and emphasized the importance of maintaining macroeconomic stability, restructuring the financial sector, and enhancing potential growth through structural reforms. Continued fiscal discipline, improved governance, and alignment with European standards are recommended to ensure long-term economic sustainability.