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This Management Implementation Plan (MIP) proposes actions in response to the Board-endorsed recommendations provided by the Independent Evaluation Office (IEO)’s report on IMF and Capacity Development (CD). Staff has already begun addressing some of the IEO recommendations and several of the actions proposed in this MIP reflect initiatives in train. Resource implications are therefore expected to be manageable in the near term as these actions have mostly been incorporated into departmental work plans and budgets for fiscal year (FY) 2024. Medium-term resource implications will be discussed in the context of the FY 2025-FY 2026 medium-term budget proposals.

Money and Monetary Policy --- Political Economy --- Budgeting --- Labor --- Economic Development --- Monetary Policy --- National Budget --- Budget Systems --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Planning Models --- Planning Policy --- Monetary economics --- Political economy --- Budgeting & financial management --- Labour --- income economics --- Development economics & emerging economies --- Monetary policy --- Budget planning and preparation --- Public financial management (PFM) --- Human capital --- Development strategy --- Development --- Economics --- Budget --- Economic development --- Income economics

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We document the importance of import prices and domestic profits as a counterpart to the recent increase in euro area inflation. Through a novel consumption deflator decomposition, we show that import prices account for 40 percent of the average change in the consumption deflator over 2022Q1 – 2023Q1, while domestic profits account for 45 percent. The increase in nominal profits was largest in sectors benefiting from increasing international commodity prices and those exposed to recent supply-demand mismatches. While the results show that firms have passed on more than the nominal cost shock, and have fared relatively better than workers, the limited available data does not point to a widespread increase in markups. Looking ahead, assuming nominal wage growth of around 4.5 percent over 2023-24 – slightly below the level seen in Q1 2023 – and broadly unchanged productivity, a normalization of the profit share to the average level over 2015-19 will be necessary to achieve a convergence of inflation to target over the next two years. Monetary policy will thus need to remain restrictive to anchor expectations and maintain subdued demand such that workers and firms settle on relative price setting that is consistent with disinflation.

Macroeconomics --- Economics: General --- Inflation --- Labor --- Price Level --- Deflation --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Wages, Compensation, and Labor Costs: General --- Macroeconomics: Consumption --- Saving --- Wealth --- Economic & financial crises & disasters --- Economics of specific sectors --- Labour --- income economics --- Prices --- Consumption --- National accounts --- Labor costs --- Currency crises --- Informal sector --- Economics --- Imports --- Income economics

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This paper studies the drivers of the labor market performance in Nicaragua with a particular focus on informality, to identify vulnerable groups during economic downturns; and estimates the speed of adjustment of employment to shocks. The paper compares this experience with the ones in other CAPDR countries (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Panama). Our findings are that while the high countercyclical informality in Nicaragua has been the active margin of adjustment during economic downturns mitigating unemployment, the trade-off has been a lower speed of adjustment to shocks hampering the country’s ability to revert to its potential. Policy recommendations relate to mitigating the impact of downturns on employment in Nicaragua, easing adjustments and inequalities in the labor market to hasten the employment recovery and thus, support growth.

Nicaragua --- Macroeconomics --- Economics: General --- Labor --- Foreign Exchange --- Informal Economy --- Underground Econom --- Demand and Supply of Labor: General --- Labor Standards: Labor Force Composition --- Unemployment: Models, Duration, Incidence, and Job Search --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Business Fluctuations --- Cycles --- Economic & financial crises & disasters --- Economics of specific sectors --- Labour --- income economics --- Economic growth --- Financial crises --- Economic sectors --- Labor markets --- Labor force participation --- Unemployment rate --- Currency crises --- Informal sector --- Economics --- Labor market --- Economic theory --- Recessions --- Income economics

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This 2022 Article IV Consultation highlights that economic activity in Spain has remained resilient despite the new headwinds posed by the fallout of Russia’s invasion of Ukraine. Strong rebound in tourism and other services have supported growth this year. Policies to mitigate the surge in energy costs should shift to more targeted income support to the vulnerable, allowing price signals to incentivize demand and supply adjustments, while containing fiscal costs. The deterioration of the macroeconomic outlook and the rise in interest rates will likely erode borrowers’ repayment capacity. Banks need to maintain prudent levels of forward-looking provisions and should be encouraged to use capital buffers in case downside risks materialize. Spain is making progress on its ambitious reform agenda and the execution of investments under the Recovery, Transformation and Resilience Plan. Establishing a system of regular, data-driven, outcome-based evaluation of the reforms’ effectiveness will be important to ensure that they achieve the desired outcomes.

Spain --- Money and Monetary Policy --- International Economics --- Macroeconomics --- Inflation --- Labor --- Foreign Exchange --- Finance: General --- Monetary Policy --- International Agreements and Observance --- International Organizations --- Price Level --- Deflation --- Energy: Demand and Supply --- Prices --- Demand and Supply of Labor: General --- Labor Economics Policies --- Aggregate Factor Income Distribution --- Monetary economics --- International institutions --- Labour --- income economics --- Currency --- Foreign exchange --- Finance --- Infectious & contagious diseases --- Monetary policy --- International organization --- Energy prices --- Labor markets --- Labor market reforms --- Income --- National accounts --- International agencies --- Labor market --- Manpower policy --- Labor economics --- Income economics

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This Selected Issues paper analyzes wage and inflation dynamics in Denmark. High profit margins contributed to growth in the gross domestic product deflator. Historical evidence suggests that the contribution from wages to price deflators will likely pick up. Nominal wage growth in Denmark has so far been modest and outpaced by high inflation, putting real wage growth in negative territory. Amid still-tight labor markets, this has raised concerns about wage pressures going forward and the eventual impact on inflation. The analysis suggests that wage formation in Denmark has historically been partly backward looking, and economic slack has played a role. Given these, high inflation realized thus far and the tightness in the labor market implies that wage pressures are expected to remain elevated in the near term. Some of these wage pressures, in turn, are expected to be passed on to core inflation, sustaining high inflation. Thus, determined policies to fight inflation are important.

Denmark --- Money and Monetary Policy --- International Economics --- Labor --- Inflation --- Emigration and Immigration --- Monetary Policy --- International Agreements and Observance --- International Organizations --- Price Level --- Deflation --- Demand and Supply of Labor: General --- Wages, Compensation, and Labor Costs: General --- International Migration --- Retirement --- Retirement Policies --- Monetary economics --- International institutions --- Labour --- income economics --- Macroeconomics --- Migration, immigration & emigration --- Monetary policy --- International organization --- Prices --- Labor supply --- Wages --- Labor markets --- Migration --- Population and demographics --- International agencies --- Labor market --- Emigration and immigration --- Income economics