In a difficult context there political response was adequate but the pandemic has brought to light long-standing challenges that now need to be addressed to ensure sustainable growth in the future. This is the conclusion of the declaration of the IMF Staff, led by the Spaniard Borja Gracia, after the annual ‘article IV’ mission to San Marino.
In the preliminary report, which anticipates the final one for the coming months, the Monetary Fund expects growth of 5.5% in 2021, reaching the pre-pandemic level already in the coming months and a + 3.7% next year. Among the main ones strengths the industrial sector which already at the end of 2020, in exports, had exceeded pre-covid levels.
The IMF also photographs a significant increase in public debt up to 105% of GDP while at the end of 2019 it stood at 32%. A leap originated above all from support for the financial system and pandemic response interventions, such as layoffs, moratoriums and the extension of tax deadlines. Crucial measures, according to the Monetary Fund, to avoid bankruptcies and mass layoffs. Furthermore, to support the recovery, the vaccination campaign with San Marino world leader in terms of speed and coverage. The payment of the interest of the bond issued on the capital market is manageable in the opinion of the IMF but without ambitious measures the refinancing – expected in 2024 – will have to be faced in a precarious budget situation.
so the reforms of income, pensions and labor. To improve the business climate, the IMF encourages digitization and streamlining of bureaucracy, continuing with greater integration into the EU. As regards the banking system, the main problem, according to Washington experts, the Npls remain and although recent legislative measures, such as securitization, are a step in the right direction, implementation should also be carried out by setting a conservative ceiling in the public guarantee.
Statement by Borja Gracia in San Marino Rtv: “When San Marino was hit by the pandemic, its economy was still facing the difficulties of the global financial crisis, so it faced it with an initial situation of fragility. However, the economy has proved resilient and has proven to withstand the pandemic. The recovery is now solid and strong and this is very positive news. It is therefore necessary to start from this positivity to reassure the international markets and the country itself that by now the past problems have been addressed and San Marino can concentrate on the reforms that will allow it a better future. The country’s main strength was the industrial sector which suffered at the beginning of the pandemic but not like other sectors. Then he resumed his business in an exciting way and is currently growing. There are two positive aspects that should be noted with regard to this year: first of all the support provided by the Government which allowed during the pandemic phase to avoid company closures and bankruptcies and this laid the foundations for economic recovery. The second very important element is the vaccination campaign which in terms of coverage was very fast and was launched earlier than other countries. This allowed for stabilize the economy and thus allow for recovery. There are still challenges to be faced. For example, complete the banking sector reform package. Much progress has been made but much remains to be done. The second element to focus on is strengthening the budget through revenue reform and pension reform. Furthermore, on the structural front, productivity must be supported and for this reason a labor reform is necessary. me too’Association Agreement with the European Union it could represent a further step forward to improve the business climate in San Marino. All reforms a reduce the risks when we return to the international capital market and also to improve the terms with which San Marino will be able to place itself in order to derive greater benefits from the renewal of the bond. But the renewal of the bond must be seen as an opportunity not as the reason reforms need to be done“.
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