| Summary: | This Article IV Consultation highlights the continued economic expansion, driven primarily by private consumption and exports of goods and services. Discussions focused primarily on increasing the economy's flexibility and resilience. Fiscal performance has been strong; however, the materialization of contingent liabilities from government guarantees is likely to reduce the overall surplus. Low public and private investment, and continued emigration, appears to weigh on medium-term growth prospects. Downside risks in the near term could result from possible changes in regional or global economic and financial conditions and the further realization of contingent liabilities. The IMF staff advocated a moderately faster fiscal adjustment. The report recommends accelerating the pace of debt reduction, which would build fiscal space and help reduce downside risks. The central bank may need to address potentially tighter external conditions while continuing with strong bank supervision and macroprudential policies. Additional measures to prevent excessive household borrowing could be considered if needed.
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