Yesterday marked the conclusion of the International Monetary Fund’s (IMF) customary staff visit, held in preparation for the annual Article IV mission scheduled for the second half of 2024.
The IMF delegation, led by mission chief Borja Gracia, held meetings with the government, social partners, representatives from various economic sectors, and, with regard to the financial system, with the Central Bank, banks and entities involved in the systemic securitization of non-performing loans (NPLs).
In the press release, issued at the end of the visit, the mission chief highlighted significant achievements in the banking sector, describing them as a "milestone" in reducing NPLs. These improvements were largely attributed to the launch of the systemic securitization initiative and the Calendar Provisioning Regulation, issued by CBSM.
Regarding the banking sector, the press release also noted substantial improvements in both profitability and liquidity among financial intermediaries, although profitability has been significantly influenced by interest rate dynamics. The mission chief also emphasized that banks continue to face important challenges, as they are expected to contend with declining interest margins due to rising funding costs and a potential increase in NPLs following the projected economic slowdown.
In this context, banks must adopt prudent policies, strengthening their capital buffers in alignment with the guidelines set by CBSM and endorsed during the IMF staff visit.
Finally, the mission chief underscored the opportunities that could arise from the signing of the European Union Association Agreement; particularly in terms of integrating San Marino’s economy into the single market and attracting foreign investors. In this regard, it was recommended to support the investments that the Central Bank will need to undertake to implement the Association Agreement within the financial system.
The press release, issued at the end of the visit, is available at the following link: https://www.imf.org/en/News/Articles/2024/04/09/PR24110-San-Marino