Country Economic Memorandum

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https://hdl.handle.net/10986/2184

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Rwanda Country Economic Memorandum: Pathways to Sustainable and Inclusive Growth in Rwanda
(Washington, DC: World Bank, 2024-11-13) World Bank
The report outlines an agenda to strengthen information and communication technology (ICT) services in Rwanda, where network coverage has improved but broadband uptake remains low. Rwanda needs to boost digital service use among consumers and the private sector by increasing access to affordable smart devices, expanding digital skills initiatives, and improving broadband quality and affordability through network upgrades, densification, and stricter competition enforcement. Key regulatory measures include a reference interconnection over (RIO), better spectrum management for next-gen technologies like 5G, and infrastructure sharing to lower service costs. While recent laws on personal data protection and cybersecurity have created a solid regulatory foundation, their implementation is still in progress. To achieve global standards, Rwanda must enhance regulations related to nonpersonal data portability and net neutrality, as current rules restrict cross-border data flows vital for digital market integration and e-commerce. This effort should be supported by regional and global collaboration on regulatory harmonization. Further public investment is needed to develop foundational digital public infrastructure, such as identification, trusted data sharing, and digital payments systems, to scale digital services safely and affordably. Additionally, improvements in the enabling framework and skills development are crucial for wider adoption of technologies like artificial intelligence (AI).
Solomon Islands Country Economic Memorandum: Unlocking New Sources of Economic Growth
(Washington, DC: World Bank, 2024-10-17) World Bank
A Country Economic Memorandum (CEM) is a diagnostic instrument to analyze key constraints to growth, support policy dialogue with the government, and inform engagement with different stakeholders. During February 2023 and March 2024, a CEM was conducted for Solomon Islands, titled ‘Solomon Islands: Country Economic Memorandum – Unlocking New Sources of Economic Growth’. The CEM examines key barriers to sustainable economic development, with a focus on challenges of economic geography, obstacles to private sector activity, and constraints in four key sectors with high growth potential (i.e., agriculture, fisheries, tourism, and labor mobility). The CEM provides actionable policy recommendations to help overcome the identified barriers and unlock new sources of economic growth.
Bhutan Country Economic Memorandum, September 2024: Maximizing Bhutan’s Potential for Economic Diversification and Structural Transformation
(Washington, DC: World Bank, 2024-09-09) World Bank
Bhutan expects to double its hydropower capacity over the next decade, which is expected to have significant effects on the economy. Estimates using a Computable General Equilibrium (CGE) model (the business-as-usual (BAU) scenario) indicate that the anticipated doubling of the hydropower generation capacity is expected to result in higher growth. However, in keeping with past experience, this growth will not be accompanied by a diversification of the economy. The economy is expected to shift towards electricity and closely related sectors. The appreciation of the real exchange rate is expected to reduce output in non-hydro tradable sectors, especially tourism-related exports. This suggests that there is scope to strengthen the government’s current approach for managing and distributing hydropower revenues to support the development of non-hydro sectors and address the negative effects of the Dutch Disease. The availability of hydropower rents provides the government with an opportunity to actively support non-hydro productivity growth and generate employment. This country economic memorandum (CEM) identifies three key areas that require urgent policy focus for achieving more robust and broad-based growth and creating more and better jobs while bolstering climate resilience: (I) facilitating economic diversification, (II) enhancing agricultural productivity and crop diversification, and (III) reforming the financial sector to support economic diversification.
Country Economic Memorandum for Burkina Faso: Making Growth More Efficient, Sustainable, and Inclusive
(Washington, DC: World Bank, 2024-07-17) Pajank, D; Abalo, K; Porte, J
Between 2000 and 2022, Burkina Faso’s economic output has more than tripled in real terms, but this has not translated into significant reductions in the number in extreme poverty. Economic growth has been highly volatile due to exposure to weather and climate shocks, political instability and conflict, and external shocks such as the COVID-19 pandemic and the war in Ukraine. Although the economy has undergone major sectoral changes, they do not reflect the degree of structural transformation needed to equip the country for future success. A slowdown in agricultural production over the past decade has left Burkina Faso less able to provide employment in rural areas and feed a growing population. Growth has not been efficient due to low productivity, a sub-optimal allocation of production factors, and major constraints to private sector development, including a low human capital base. Growth has also not been sustainable due to low levels of investment, the deterioration of public finances, and the destruction of natural resources, which all limit the economy’s resilience to shocks. Finally, growth has not been inclusive due to the underemployment of young people and women in the formal sectors of the economy, and little redistribution of the fruits of growth. The policy objective in this area will be to increase women’s engagement in higher-value sectors, improve their access to productive inputs, and increase their physical security and household agency. Under the high, sustainable, and inclusive growth scenario, significant per capita GDP gains would see Burkina Faso join the group of lower middle-income countries by 2040 and remain in the group thereafter.
From Landlocked to Land of Opportunity: Paraguay Country Economic Memorandum
(Washington, DC: World Bank, 2024-07-09) World Bank
Paraguay has been a beacon of macroeconomic stability, but like the rest of the region, its average growth has moderated since 2013, which has affected the pace of poverty reduction. To accelerate growth and poverty reduction, it is important to continue to increase resilience against external shocks, productivity, and the sustainability of growth. Improving the quality and efficiency of public institutions, market efficiency, innovation, education, and infrastructure will promote economic productivity. Diversifying exports away from unprocessed commodities will strengthen economic resilience but will be a lengthy process. Meanwhile, the continued commitment to stable macroeconomic and fiscal policies, a deepened financial sector, and risk mitigation policies will increase economic resilience. Paraguay does not have to choose between profitability and sustainability: both are possible and complementary. Greener growth will yield a stronger, more prosperous economy.
Argentina Country Economic Memorandum: A New Growth Horizon - Improve Fiscal Policy, Open Markets, and Invest in Human Capital
(Washington, DC: World Bank, 2024-06-20) World Bank Group
Argentina’s production capabilities, characterized by its abundant natural capital assets and well-educated workforce, have the potential to drive sustained and inclusive economic growth. Argentina is home to diverse natural resources, including the world’s second-largest deposits of lithium, and the second-largest gas shale and fourth-largest shale oil reserves. Its fertile land makes it a major agricultural producer, ranking third in soybean production worldwide. Human capital is rooted in its historically high-quality education and health services, as well as notable achievements in knowledge-intensive sectors such as research and innovation. This report identifies three key constraints to sustaining growth in Argentina. First and foremost, macroeconomic volatility is largely responsible for poor growth outcomes: high policy uncertainty and fiscal procyclicality have contributed to a cycle of booms and crashes. Volatility is also driven by an increasing overreliance on primary commodities. Stubborn and high inflation in addition to abrupt changes in exchange rates reduce planning horizons for long-term investment and impede the development of capital markets. Second, restrictive trade policies, in place partly because of macroeconomic imbalances, prevent Argentina from leveraging its vast comparative advantages to reap the benefits of international trade. Third, while human capital is among Argentina’s greatest assets, its quality is gradually declining. Without corrective policies, the skills of the country’s workforce could fall rapidly behind those demanded by a dynamic, technology-driven, knowledge-intensive global economy.
Botswana - Country Economic Memorandum: In Search of New Drivers of Inclusive Growth
(Washington, DC: World Bank, 2024-06-07) World Bank
Botswana aspires to become a high-income economy and eradicate extreme poverty by 2036, but it has shifted from a top to a mid-range performer over the past decade. The public sector-led growth model built on diamond rents shows signs of exhaustion, while the economy has become more vulnerable to financial, climate and health shocks. Botswana can meet its aspirations and avoid getting caught in a middle-income country trap with a greater emphasis on creating the conditions for productivity-led inclusive growth. This report intends to be an input into the government’s strategic vision and policymaking to help move Botswana closer to its ambitious objective of becoming a high-income economy by 2036.
Eswatini - Country Economic Memorandum: In search of the drivers of inclusive growth
(Washington, DC: World Bank, 2024-06-06) World Bank
This report intends to be an input into the government’s strategic vision and policymaking to help move Eswatini closer to its ambitious objective of boosting inclusive growth and becoming an upper middle-income economy by: Carrying out diagnostics on past economic performance and undertaking forecasting analysis for potential future growth trajectories while uncovering binding constraints and realistic opportunities; Using a conceptual approach based on well established methodologies and benchmarking analysis with a set of aspirational peer countries; Emphasizing a growth strategy underpinned by greater investment, productivity, innovation, inclusion and government effectiveness; Drawing lessons from the policy experience of countries that faced similar challenges, including some that graduated or are close to graduating from upper middle- to higher-income status.
Zambia Country Economic Memorandum, June 2024: Unlocking Productivity and Economic Transformation for Better Jobs
(Washington, DC: World Bank, 2024-05-28) World Bank
Zambia needs to increase productivity and accelerate economic transformation to achieve sustained and inclusive growth. Zambia’s debt resolution and ongoing reforms are expected to support macroeconomic stability and reignite private-sector investment. By October 2023, the Government of the Republic of Zambia (GRZ) reached an agreement with the Official Creditor’s Committee (OCC) on debt restructuring under the G20 Common Framework and, by late March 2024, it was announced that a deal was reached with bondholders. As of the end of the first quarter of 2024, the Zambian authorities are in the final phase of debt negotiations involving the other private lenders. Since 2021, the GRZ has launched an ambitious reform program. It saw the primary balance improve by 6.6 percentage points in 2022, bringing it to a surplus and cutting inflation by half. The authorities have introduced measures to boost private investment and have rebalanced the composition of government spending. This Country Economic Memorandum (CEM) discusses two pathways that can support Zambia’s productivity-enhancing economic transformation, generate better jobs, and deliver sustained and inclusive growth. Economies transform when more people join the labor force and find jobs, become more productive in them, or reallocate to more productive jobs. These factors cause average labor productivity to rise with labor incomes. But in Zambia, productivity has been on a declining trend, and only the capital-intensive mining sector has seen significant labor productivity increases. Raising the productivity of agriculture is the first pathway for tackling Zambia’s development challenges (Chapter 2). It has enormous potential to drive poverty reduction, but expensive and distortive support programs, coupled with increasing climate hazards, constrain productivity growth and dampen opportunities to diversify beyond maize. The second pathway involves Zambia making critical economy-wide reforms to unlock broad-based private sector productivity growth and increase its role in driving jobs and economic transformation (Chapter 3). Two background papers that take deep dives into these two themes are published alongside this report.
Bosnia and Herzegovina Country Economic Memorandum, January 2024
(Washington, DC: World Bank, 2024-02-13) World Bank
Bosnia and Herzegovina (BiH) have made significant development progress since the last Country Economic Memorandum (CEM) in 2005, most notably in obtaining EU candidate status in 2022. Despite persistent political tensions, the country has enjoyed nearly three decades of peace. The infrastructure, severely damaged during the 1990s, has been rebuilt, with ongoing investments in improving road and rail connectivity. The policymaking process involves elected officials navigating a complex, politically fragmented landscape, characterized by national quotas, ensuring representation for Bosnia’s, Croats, and Serbs. The representation of individuals who do not identify with any of these three national groups has not been resolved yet. These factors make BiH unique in Europe, rooted in the Dayton Agreement of 1995, which brought an end to a devastating war that claimed approximately 100,000 lives and displaced over half of the population. Now, almost two decades after the last Economic Memorandum, BiH features as an EU candidate country. Macroeconomic policies have tended to favor short-term objectives at the expense of long-term growth, with a focus on fostering consumption rather than investment. Current budget spending, particularly on public wages, pensions, and social benefits has constrained capital expenditure over the past 10-15 years. Consequently, public capital expenditures in both entities are limited, with only half the size in comparison to their Western Balkan peers. Furthermore, there is a discernable lack of coordination across the entities within sectors such as transport infrastructure, particularly railways and roads that contribute to important intermediate input distortions, as well as digital and energy infrastructure. Moreover, while sharing the same priorities as reflected in the socio-economic reform package, the speed of reform implementation differs across entities. Foreign direct investment inflows, meanwhile, remain insufficient, and significantly below regional peers. Thus, a shift towards structural and fiscal reforms with medium- to long-term benefits, such as a more efficient social transfer system using social cards, as well as higher and more coordinated capital expenditures across the entities could pave the way for higher productivity and thus a more competitive economy.