ANNUAL REPORT September 2017 MIDDLE EAST REGIONAL TECHNICAL ASSISTANCE CENTER (METAC) Partners Contributing Members Contributing Members to Phase IV to Phase IV European Union Algeria Afghanistan France Egypt Djibouti Germany Iraq Jordan Switzerland Lebanon Libya The Netherlands Sudan Morocco Syria Tunisia West Bank and Gaza Yemen STATEMENT BY THE CHAIRPERSON OF METAC STEERING COMMITTEE This year was marked by the beginning of the Center’s fourth funding cycle (Phase IV, Fiscal Year (FY) 2017-21); the expansion of METAC’s membership, with four new members Algeria, Djibouti, Morocco, and Tunisia, joining the center in May 2016; as well as the increase in METAC partners, with the Netherlands and Switzerland, becoming new donor partners in 2016. I would like to take this opportunity to first welcome the new member countries and donor partners to METAC. METAC’s role in supporting institutional and human capacity building in the region continues to be key to achieving economic development and better standards of living in the region. This is even more important today, when the Middle East and North Africa region is going through an extraordinary period of turmoil and conflict; and mitigating the economic costs of conflicts and the refugee crisis requires deep macroeconomic and structural reforms, supported by capacity development from the international community. In this context, I am pleased to report that despite the security situation in several countries in the region, METAC’s overall program implementation was about 93 percent during FY17. This couldn’t have been achieved without METAC’s flexibility and readiness to respond to emerging needs of member countries. I also want to point out that METAC expanded its assistance to countries with precarious security situation, through missions in third countries. Since its establishment, METAC’s assistance to beneficiary countries has been based on assessment of the technical assistance and training needs of member countries. Certainly, there has been many tangible results and successes in METAC’s delivery of technical assistance. In Lebanon, for example, METAC recently assisted the Ministry of Finance in strengthening the institutional framework for identifying and managing fiscal risks, adopting the International Public Sector Accounting Standards, and enhancing detection and prevention of VAT refund fraud. Also, thanks to the Center’s assistance, the Lebanese Central Administration of Statistics could publish for the first time since 2010 statistics on Gross National Income and Gross National Disposable Income together with the national accounts dataset for 2014 and 2015. Going forward, it is gratifying to note that the Center is planning to increase its activities in FY18 by 24 percent, to respond to the increased needs of member countries. The planned increase in METAC’s activities was also lauded by the Steering Committee during its last annual meeting, which focused on METAC’s relevance and responsiveness. I want to emphasize that the Center’s achievements would not have been possible without the generous contributions of donor partners and member countries. Going forward, we need to ensure that METAC has the needed resources to broaden its activities in the region, and to be able to help, in particular, the countries that are currently going through conflict. METAC’s involvement in these countries is expected to increase significantly once the security situation normalizes. In this context, I would like to thank the European Union, France, Germany, the Netherlands, and Switzerland for their support to METAC and for their generous contributions, and encourage member countries (including new members) to provide timely financial support to METAC, so that it continues to serve its members. For its part, Lebanon has also adhered to its commitment as METAC’s host country, with the Cabinet recently approving its pledges to METAC. I believe that our joint efforts will help strengthen and further enhance the Center’s effectiveness. Ali Hassan Khalil Minister of Finance of Lebanon 2 CONTENTS STATEMENT BY THE CHAIRPERSON OF METAC STEERING COMMITTEE _____________________ 2 ACRONYMS AND ABBREVIATIONS _____________________________________________________________ 5 SECTION I: EXECUTIVE SUMMARY ______________________________________________________________ 8 SECTION II: MACROECONOMIC CONTEXT ___________________________________________________ 12 SECTION III: METAC’S ACTIVITIES IN FISCAL YEAR 2017 ____________________________________ 15 A. METAC’s Activities in Fiscal Year 2017 _________________________________________________________ 15 B. METAC’s Plans for Fiscal Year 2018 ____________________________________________________________ 16 SECTION IV: COLLABORATION WITH PARTNERS AND PEER-TO-PEER LEARNING _________ 21 SECTION V: BUDGET AND FINANCING _______________________________________________________ 23 SECTION VI: METAC’S ACTIVITIES IN FISCAL YEAR 2017 BY AREA _________________________ 27 A. Banking Regulation and Supervision __________________________________________________________ 27 B. Public Financial Management _________________________________________________________________ 30 C. Revenue Administration _______________________________________________________________________ 32 D. Macroeconomic Statistics _____________________________________________________________________ 34 SECTION VII: METAC’S ACTIVITIES IN FISCAL YEAR 2017 BY COUNTRY ____________________ 40 A. Afghanistan ___________________________________________________________________________________ 40 B. Algeria ________________________________________________________________________________________ 42 C. Djibouti _______________________________________________________________________________________ 43 D. Egypt _________________________________________________________________________________________ 44 E. Iraq ____________________________________________________________________________________________ 46 F. Jordan _________________________________________________________________________________________ 49 G. Lebanon ______________________________________________________________________________________ 52 H. Libya __________________________________________________________________________________________ 55 I. Morocco _______________________________________________________________________________________ 55 J. Sudan __________________________________________________________________________________________ 56 K. Tunisia ________________________________________________________________________________________ 58 L. West Bank and Gaza ___________________________________________________________________________ 59 M. Regional Workshops _________________________________________________________________________ 61 SECTION VIII: METAC’S OTHER ACTIVITIES __________________________________________________ 65 BOXES Box 1: METAC’s Key Achievements _______________________________________________________________ 10 3 TABLES Table 1. FY17 Status of METAC Outcome Milestone by Area _____________________________________ 15 Table 2. METAC Activities in FY17 by Country ____________________________________________________ 15 Table 3. METAC’s Planned Activities in FY18 _____________________________________________________ 17 Table 4. METAC’s Resource Distribution in FY18 by Area and Country ___________________________ 19 Table 5. METAC’s Status of Financial Contributions ______________________________________________ 23 Table 6. METAC’s Consolidated Financial Status _________________________________________________ 24 Table 7. FY17 Budget ____________________________________________________________________________ 25 ANNEXES Annex I: The IMF Regional Technical Assistance Centers and METAC ____________________________ 70 Annex II: METAC’s Strategic Log Frame for Fiscal Year 2018 _____________________________________ 73 Annex III: METAC’s Work Plan for Fiscal Year 2018 _______________________________________________ 79 Annex IV: METAC’s Updated Work Plan for Fiscal Year 2017 ___________________________________ 119 Annex V: METAC Steering Committee Members _______________________________________________ 161 Annex VI: METAC Staff Profile __________________________________________________________________ 166 4 ACRONYMS AND ABBREVIATIONS BAM Bank Al-Maghrib BCBS Basel Committee on Banking Supervision BCCL Banking Control Commission of Lebanon BCD Banque Centrale de Djibouti BRS Banking Regulation and Supervision CAS Central Administration of Statistics, Lebanon CBE Central Bank of Egypt CBI Central Bank of Iraq CBJ Central Bank of Jordan CBoS Central Bank of Sudan CBT Central Bank of Tunisia CD Capacity Development CEF IMF Middle East Center for Economics and Finance CIASA Credit Information and Scoring Agency, Sudan CPI Consumer Price Index DAB Da Afghanistan Bank DfID United Kingdom Department for International Development DOS Department of Statistics, Jordan EFF Extended Fund Facility ESS External Sector Statistics FAD IMF, Fiscal Affairs Department FSAP Financial Stability Assessment Program FY Fiscal Year GDP Gross Domestic Product ICAAP Internal Capital Adequacy Assessment Process IIFS Institutions Offering Islamic Financial Services IMF International Monetary Fund IMF-HQ IMF, Headquarters IPSAS International Public Sector Accounting Standards ISTD Income and Sales Tax Department MCD IMF, Middle East and Central Asia Department MCM IMF, Monetary and Capital Markets Department MENA Middle East and North Africa METAC Middle East Regional Technical