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IMF upbeat on Swiss economic prospects

Finance minister Kaspar Villiger said the IMF report showed Switzerland was on the right track

(Keystone Archive)

The Swiss economy is in good shape and is on track to enjoy further growth, according to the International Monetary Fund.

In a report issued on Monday in Bern, the IMF said the economy was in a strong position to benefit from the global recovery, thanks to the policies being pursued by the Swiss authorities.

But the financial body said sustained growth would depend on the government continuing its transparent macroeconomic policies and accelerating structural reforms.

At a news conference to mark the release of the report the finance minister, Kaspar Villiger, said the findings confirmed the stability of Switzerland's financial sector.

"Switzerland has done its homework in regulating the sector, in averting financial crises and not least in preserving the integrity of the markets," Villiger said.

The upbeat assessment followed a visit to Switzerland by an IMF team, which collected economic and financial information and held discussions with officials. The visit took place within the framework of the Financial Sector Assessment Program run jointly by the IMF and the World Bank.

The IMF report comes hard on the heels of a survey by the Organisation for Economic Cooperation and Development (OECD), which called on Switzerland to pursue reforms "vigorously". But the OECD report also recognised the considerable potential for economic progress after years of stagnation.

Low inflation

Presenting their conclusions, the IMF directors said Switzerland enjoyed one of the lowest inflation rates in Europe and had achieved a record external current account surplus in 2000.

The directors also commended the new fiscal framework - the so-called "debt brake" - which will require the federal budget to be in balance from next year.

However, the report pointed out that output in Switzerland was currently below potential and signs of recovery were still tentative. Real GDP - which grew by 1.3 per cent last year - was expected to grow by just under one per cent in 2002, it said.

The directors agreed that an acceleration of market reforms would be the key to improving the country's productivity and growth.

Looking ahead, they noted that savings would be necessary and recommended that the authorities give priority to curbing expenditure growth rather than raising taxes.

They said they looked forward to the implementation of the bilateral agreements with the European Union, which they hoped would address the country's shortage of skilled labour.

Money laundering

The IMF report welcomed moves to improve banking supervision and commended the authorities for efforts to combat money laundering and track down terrorist financing.

Switzerland is one of the first industrialised countries to agree to take part in the Financial Sector Assessment Program. The finance ministry said there were several reasons for the decision.

"Switzerland has always supported the IMF's push towards transparency and financial sector surveillance," finance ministry official René Weber told swissinfo.

"We were able to demonstrate that we had a very regulated, well supervised financial sector," Weber added. He said Switzerland had also hoped to win IMF support for its regulatory reforms and to benefit from the fund's expertise.

In a statement, the Swiss Bankers Association (SBA) welcomed the IMF's positive assessment of the banking and financial sectors. "The IMF's investigation shows that Swiss regulation and supervision match international standards," the association said.

"The SBA is very pleased that the Swiss financial sector has been judged to be safe and crisis resistant by such an internationally-renowned organisation as the IMF," the statement added.

swissinfo

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