Academic literature on the topic 'Foreign experience of the EU countries'

The article analyzes the EU experience in the field of counter-terrorism. Problems of implementation of the state policy in this sphere are explored. Measures taken by EU countries to prevent terrorism are being examined. The national legislation of some European countries on counter-terrorism is analyzed. The article concludes that the current international counter-terrorism policy is characterized by the adoption of acts that take into account the need to criminalize all socially dangerous acts of terrorism, strengthen interdepartmental cooperation between law enforcement and special services of foreign countries, establish links between regional counterterrorism structures.

The concepts and types of fakes are considered. The principles and methods of detecting fakes and misinformation on the examples of EU countries are determined. The experience of some EU countries in the field of counterfeiting and misinformation is analyzed. The practice of some countries of the world to criminalize the dissemination of unreliable information and fakes is summarized. Measures to combat fakes and misinformation are proposed. The directions of the improvements of countering fakes in the domestic media space have been identified.

Introduction. In the current conditions of the integration movement of Ukraine to the European Union and the reform of the institutions of state power, the issue of studying foreign experience of the system of taxation of individuals' incomes is actualized. The application of effective practices of other states will contribute to increasing the fiscal role of the personal income tax in Ukraine, reducing social inequality and increasing the welfare of the population. Purpose. The purpose of the article is to find out the features, trends and problems of the functioning of the personal income tax in foreign countries. Results. The article deals with the foreign experience of functioning of the system of personal income taxation. The role and role of PIT in the EU and OECD countries is shown. The proportional and progressive approach to taxation of this tax is considered, their key advantages and disadvantages are determined. An analogy has been made between the European states, the OECD member states and Ukraine. The objective necessity of establishing a non-taxable minimum or partial exemption of citizens' incomes from taxes in the context of support of low-income categories of the population and ensuring social justice is substantiated. Conclusions. It is concluded that in developed countries, the progressive system of taxation of the PIT along with the minimum non-taxable minimum is an effective tool for generating budget revenues and solving social inequalities in society. Instead, third-world states can not use this mechanism in a qualitative way due to significant tax compliance problems. They apply a proportional taxation system for PIT that minimizes tax evasion and international competitiveness.

The article analyses the development process and establishment of the public procurement institute in Ukraine and foreign countries, examines the organizational and legal regulation of public procurement in Ukraine, identifies legal regulation of public procurement in the European Union and ways to implement the experience of European legislation in the field of public procurement in Ukraine.

The article provides the dynamics and structure comparative analysis of the wheat resources formation and their usage in Russia, USA, EU countries. The study was based on an assessment of the grain resources balance, which reflect the movement of products from the moment of production to the moment of its final use. The main trends in the development of the grain sector in the Russian Federation, the USA and the EU countries are revealed. The change in the structure of the grain resources formation from 2000 to 2020, as well as their use is shown. The EU countries and the USA are characterized by a balanced grain food chain. In the structure of US wheat resources usage, domestic consumption, including consumption for livestock and poultry feed, processing for flour, cereals, compound feed and other purposes, occupies about 40%, in EU countries - up to 80% of resources. In the Russian Federation since 2000, a decrease in domestic consumption of wheat has been revealed for all structural components. During the study period, there has been a significant increase in Russian wheat exports. Its share in the resources of the Russian Federation increased from 1.8% in 2000/01 marketing year to 39.3% in 2020/21 marketing year. As a result of the study, the necessity of forming a balanced grain product chain in Russia, the development of domestic demand and consumption has been substantiated.

The article considers the foreign experience of financial regulation of small and medium-sized businesses. Given the entry of the Republic of Kazakhstan into the world economy, the development of small and medium-sized businesses in the country will lead to active participation and assistance from the state. That is, in many countries today, much attention is paid to addressing issues related to the stability and efficiency of small and medium-sized enterprises. Therefore, it is of particular interest to study the experience of foreign developed countries in supporting the development of small and medium-sized businesses. Taking this knowledge into account, it is necessary to determine measures and prospects for improving this area of activity in the Republic of Kazakhstan. The EU has a well-established infrastructure for supporting small and medium-sized businesses, for example, all EU member states have a well-developed network of both public and private financial regulation organizations for the development and support of small and medium-sized businesses. In the countries under consideration, many of the same features of state support systems can be noted. All this is due to the influence of globalization processes and the activity of organizations. In this regard, considering the experience of foreign countries is very important and most appropriate.

Innovation and investment development is an important pre-requisite, to form competitive environment, improve the efficiency of economic entities and the liberalization process, in general. Foreign experience convincingly shows that liberalization processes in terms of radical adaptation of legislation, as well as stability, reliability and continuity of power supply (provided that the energy sector is demonopolized) are considered efficient if causing synergistic effect, making the performance of power supply business entities by times better than it used to be. The article studies the features of the transformation processes in the energy markets in the advanced countries and in Europe. A review of the criteria that formed the basis for the study has been carried out. The author identifies some consequences of the abovementioned reform of the regional energy sector markets, carried out by integrating the country’s industrial sector development. It is also mentioned that the specificity of territorial and climatic conditions should promote the search for and implementation of a model that would ensure the continuity and multi-functionality of national and regional energy markets. The stages of the reform have been monitored. The analysis of the implementation of the regulatory framework was focused on the following points: the differentiation of certain activities related to the transportation, production, purchase and sale of energy; unification of the single tariff for using energy resources on all the EU territories. It has been found out that the process of reforming the energy markets has no universal scenario that could accelerate these processes, as the transformation is only carried out under special conditions specific to a particular country. The experience of the advanced countries has shown that the consequences of the reform differ despite the application of the same models. It is noted that during the liberalization of energy markets, the EU countries primarily aimed at implementing regulatory instruments, and structurally divided them into 3 stages for the entire reformation period. The future scenario of reforming Ukraine’s energy market is outlined, taking into account the experience of the advanced countries with an emphasis on the following sectors: «the market of direct bilateral agreements», «futures market», «balancing market», «related market». The industry reform and its structural support have been monitored. The measures to be taken to reform the energy market are systematized in 4 groups: regulatory and legal, organizational and structural, financial and investment, technical and innovative measures.

Theoretical and practical approaches to the formation of land market in Ukraine are considered in the article. The views of scientists and practitioners on the problem of creating land market are summarized. It has been proven that land market is vital for agriculture and rural residents. It allows using land as collateral for agricultural enterprises. It is a source of income for farmers and allows land to move to a more efficient owner. It is investigated that during the transformations in the agricultural sector of Ukraine, the state monopoly on land was abolished, agricultural enterprises were privatized, new market structures were created, that is preconditions were created for the introduction of market land turnover and formation of the secondary market of agricultural land. Today it is obvious that further regulation of land relations is needed to ensure effective development of newly created economic agricultural formations. The lack of a real market for agricultural land hinders their efficient distribution and restrains long-term investment in land and agriculture in general. The history of reforming land relations of foreign countries is analyzed and systematized. Peculiarities of land markets formation and organization of lease land relations in the countries of the world are shown. It is studied that the state regulation of the agricultural land market of the EU member states is aimed at preserving land, preventing excessive concentration or fragmentation of land, sale of land primarily to farmers who have experience in agricultural production and live in the area. The issue of the land market is especially acute for countries with economies in transition, including Ukraine. Of particular note is the lease of agricultural land, which is the main form of land relations in many countries. The need to apply positive foreign experience in creating a market for agricultural land in Ukraine is indicated.

The article is devoted to the topical issue of studying the foreign experience of legal regulation of the franchise agreement. The author emphasizes that there is no comprehensive full-fledged regulation of the franchise agreement either in the national legislation of individual EU member states or at the international level. The article focuses on the franchisor's obligation to enter into an agreement to provide future franchisees with information about doing business under the franchise system, including the basic conditions of the franchise, data on the number of franchisees in the network, its growth, financial performance, etc. The experience of legal regulation of a franchise agreement in such foreign countries as the USA, Great Britain, Italy, Germany, Spain, Estonia, Lithuania, Australia, etc. is considered. The duality of the legal regulation of franchising at the federal and local levels, as well as the prevalence of the most favorable rules for franchisors (USA) is demonstrated. The author focuses on the experience of the institute of self-regulation of franchising and the establishment of appropriate criteria for franchise companies in the absence of government regulation (Britain). The need to adopt a single institutional law in the field of franchising and to enshrine in it all the key terms used in franchising: the actual franchise agreement, know-how, entrance fee, royalties (periodic payments for the use of intellectual property), the franchisor's goods (Italy). It is expedient to establish a provision on mandatory pre-contractual disclosure of information, according to which the counterparty is provided with information on experience, company experience, prospects for the development of the relevant market, duration of the agreement, terms of renewal or termination of contractual relations (France).

Foreign experience (EU and NAFTA) in single services market formation is analyzed in the article, key elements which are practically important for national business and state structures in the CIS development context are revealed. An important feature of modern regionalism is the liberalization of service industry. This idea is not new for CIS countries as well  it was declared in its constituent documents. However, up to date there are no real results in this field. More close economic ties develop in the Eurasian Economic Community (EurAsEC) framework. The creation of the Customs Union of Russia, Kazakhstan and Belarus in 2010 became an important landmark on the way to economic integration between them. In 2009–2011, the three countries consistently declared their ambition to create the Common Free Market Zone (CFMZ) in 2012, implicating the freedom of commodities, services, labor and capital movement. The freedom of commodities movement is already achieved within the Customs Union, with few exceptions. The liberalization of service markets will be one of the key elements of integration extension and transit to the common market. Moreover, the integration in this sphere will allow for a greater diversification of national economies, interstate trade structure, and will also lead to creation of new work positions.

This thesis in Global Development has looked at the personal experiences of non-European medical doctors that have migrated to Sweden to find out what they have encountered during the process of trying to obtain a Swedish medical license and if there are signs of discrimination. Sweden has a shortage of doctors, but has not resorted to brain drain. Contrary, it is difficult for non-European doctors to work as doctors in Sweden. This thesis has used a qualitative research strategy and five non-European unemployed doctors that were trying to get Swedish medical licenses as well as one non-European doctor that was working, were interviewed. Empirical data from a seminar with Swedish doctors about the pro-cess that foreign doctors have to go through to be able to work in Sweden has also been used in this thesis. The results showed that doctors from non-European countries have stricter requirements to fulfill in order to be able to practice medicine in Sweden than doctors coming from European countries. The system for accepting foreign doctors and validating their competence was flawed. The pro-cess was confusing, frustrating and unnecessarily long. Although there was no direct discrimina-tion or prejudice, European doctors were favored by the system.
Denna C-uppsats i Global Utveckling har tittat på personliga erfarenheter av icke-europeiska läkare som har migrerat till Sverige för att ta reda på vad de har stött på under processen av att skaffa svensk läkarlegitimation och om det finns tecken på diskriminering. Sverige har brist på läkare, men har inte tillgripit ”brain drain”. Tvärtemot är det svårt för icke-europeiska läkare att arbeta som läkare i Sverige. En kvalitativ forskningsstrategi har använts och fem icke-europeiska arbetslösa läkare som försökte få svenska läkarlegitimationer samt en icke-europeisk läkare som arbetade intervjuades. Empiriska data från ett seminarium med svenska läkare som handlade om processen som utländska läkare måste gå igenom för att kunna arbeta i Sverige har också använts i denna C-uppsats. Resultaten visade att läkare från icke-europeiska länder har strängare krav att uppfylla för att kunna arbeta som läkare i Sverige än läkare som kommer från europeiska länder. Systemet för att ta emot icke-europeiska läkare och validera deras kompetens var bristfällig. Processen var förvirrande, frustrerande och onödigt lång. Även om det inte fanns någon direkt diskriminering, så var europeiska läkare gynnade av systemet.

This thesis examines the EU arms embargo on China as a case-study, analysing the apparent paradox of the EU’s foreign and economic external policy mechanisms internally and the American involvement in the EU’s foreign and economic external policy with regard to China. The thesis firstly introduces the uniqueness of the Chinese arms embargo in contrast to the other 22 arms embargoes issued in EU’s history. In terms of the case-study, the EU’s arms embargo on China did not become a key contentious issue until the initial moves by the EU Commission to lift it surfaced in 2004. The analysis of the EU foreign and economic external policies towards China and the arms embargo focuses on the political, legal, and economic foundations of EC/EU policy and seeks to offer explanations of the evolution of events at EU institutional level, the EU member states’ level, and the wider international level. The thesis examines the evolution of the EC/EU – Chinese relationship. It also examines how the key political issue of the embargo eventually came to become a technical matter, which lost some of its importance to the Chinese. In this evolution, the thesis picks up on Chinese scholars’ fascination with the EU – the relationship between its institutions, and the member states relationship with each other and the EU institutions with regard to the arms embargo. It notes that some Chinese scholars have seen the EU as a potential role model for the developments in China and the region of Asia. The thesis notes the role of the outsider player, the United States of America, which influenced the making and implementation of foreign and economic external policy of the EU. The thesis proves that China is fully aware of the continuous influence exerted by the US onto the EU-Chinese relationship. In sum, the arms embargo is an ideal test case to examine: a) the evolution of the EU’s coherence, consistency and independence and b) the evolution of Chinese thinking about the EU model.

Purpose – though the global financial crisis is well behind us several EU countries continue to experience problems with public finance stability and need to cope with the consequences of high public debt. The purpose of the article is to find the relationship between government debt and of public finance stability in Lithuania. Research methodology – in order to achieve the aim of the article Financial Stability Index (FSI) for Lithuania has been created. It is based on theory and previous research. To find the determinants of FSI the multiple regression analysis model was specified and tested using Ordinary Least Squares (OLS). Findings – the results of multiple regression analysis indicate the government debt has a statistically significant impact on FSI, ceteris paribus. Other findings of the research show that profit or loss of the non-financial sector, foreign trade balance as well as a foreign direct investment are significant determinants of public finance stability. Research limitations – one of the limitations of this research is the small sample size that has an impact on the validity and generalizability of the results. Having a longer time-series data or panel data for more countries would improve the robustness and applicability of research results. Practical implications – the results of the research provide guidance to policymakers in the public finance area. Originality/Value − this paper contributes to the scarce literature on government debt and other determinants of financial stability in Lithuania

“Entrepreneurs are heroes in our society. They fail for the rest of us….. Courage (risk taking) is the highest virtue. We need entrepreneurs.”Nassim Taleb (2018: p36 & p189) – Skin in the Game: Hidden Asymmetries in Daily Life. Drucker (1985) states that entrepreneurship is neither a science nor an art, but a practice. Therefore, this paper works with the assumption that entrepreneurship can be nurtured. The skills and competencies that a deeper learning around entrepreneurship can bring has the potential to make all students more creative individuals. Unfortunately, according to Eurostat (2019), Ireland is one of the worst countries in Europe for start-ups, lagging behind the E.U. average. Additionally, Entrepreneurship Education at School in Europe (2015) found that Ireland was the country with the lowest percentage of young people that have started their own business. Is our education system failing to equip our youth with skills and competences needed for entrepreneurship? If this is the case, Ireland needs to implement a policy that can change this, before Ireland becomes even more dependent on multinational/foreign companies for economic growth and employment. Other countries have shown that learning “for” and “about” entrepreneurship can bring many more benefits than just business formation ideas (Bager, 2011; EU Expert Group, 2008). Even if one does not value entrepreneurship, or has no interest in being an entrepreneur, the skills and competences learned will help every individual, regardless of their career choice. This paper argues that introducing an entrepreneurial education policy in Ireland could reap massive benefits moving forward. This paper aims to carry out three tasks: 1. To outline an entrepreneurial and enterprise education policy that increases students’ autonomy of their own learning experiences. 2. To present a convincing argument of why Ireland should implement this policy moving forward. 3. Recommend plausible and practical actions in order to implement such a policy in Ireland. This paper is structured as follows: the theory section outlines the Self-Determination Theory that serves as the theoretical backbone for this argument. Evidence of Good Practise presents evidence to back up the need for such a policy and possible solutions towards the improvement of entrepreneurship education. This will build on the theory presented in the Method Section. Conclusions summarises the argument presented and highlights future lines of research.

The article deals with the ethno-cultural aspects of globalization on the example of European countries, members of the European Union. The influence of the ethno-cultural factor on political, economic and cultural relations within the EU member-states, between the EU member-states and relations with immigrants from Africa, Asia and the Middle East is shown. The forecast for the further development of the European Union as a major factor of globalization is given.

The article considers approaches to understanding “know-how” in certain foreign countries. The provisions of international documents regulating production secrets are described. The author describes several theories of understanding trade secrets, considers some features of the protection of production secrets in the United States, France, and Switzerland. It is concluded that the legal protection of “know-how” in the EU countries is very effective, and the legislation of these countries regulating this issue is quite developed. The legal norms meet all the criteria established by the World Intellectual Property Organization.

According to the general theory, it is recognized that exports increase employment. Recently, in the world economy, increasing unemployment, foreign trade of the impact on employment has led to new research. Many of the aforementioned studies validating the theory, some of them have different results. In recent studies in Turkey was a different result. In this study, Turkey and the European Union countries in terms of trade effect on employment will be examined. For this purpose, employment and foreign trade data for the years 2000-2012 using a panel data analysis will be done. Exports, imports, wages, and production depending on the change in employment and the interaction will be investigated. Depending on available data at the sectoral level, there will be a distinction. Especially in the last ten years, the recession and rise in unemployment in Europe will be discussed with the relevant dynamics. In Turkey, the current account deficit, growth, unemployment issues are noteworthy. European Union accession process, Turkey and the European Union countries in the comparison will be significant in the economic indicators.

We assess the consequences for consumers in 76 countries of multinational acquisitions in beer and spirits. Outcomes depend on how changes in ownership affect markups versus efficiency. We find that owner fixed effects contribute very little to the performance of brands. On average, foreign ownership tends to raise costs and lower appeal. Using the estimated model, we simulate the consequences of counter-factual national merger regulation. The US beer price index would have been 4-7% higher without divestitures. Up to 30% savings could have been obtained in Latin America by emulating the pro-competition policies of the US and EU.

Four countries in the Western Balkan region (Kosovo, Bosnia and Herzegovina, North Macedonia, and Montenegro) are in the top ten countries with the most foreign terrorist fighters (FTFs) per capita. The political will to repatriate FTFs remains strong, at least in the Western Balkans, despite delays in 2020 due to COVID-19. In other parts of the world, especially high-income countries, political will to repatriate is considerably lower. COVID-19 has further constrained nations in their efforts to repatriate law-abiding citizens, which is less controversial than FTF families. Based on discussions with government officials and security officers in the Western Balkans as well as international experts and donors, this policy note provides operational recommendations to move forward with repatriation, rehabilitation, and reintegration of returnees building on lessons from repatriations in Albania, Kosovo, and North Macedonia. It urges governments globally to double down on repatriation efforts and to call on experience from governments in the Balkans to bring back their FTFs now. The recommendations in this policy note are relevant to any country where political will to repatriate FTFs can be generated.

Germany is a parliamentary democracy (The Federal Government, 2021) with two politically independent levels of 1) Federal (Bund) and 2) State (Länder or Bundesländer), and has a highly differentiated decentralized system of Government and administration (Deutsche Gesellschaft für Internationale Zusammenarbeit, 2021). The 16 states in Germany have their own government and legislations which means the federal authority has the responsibility of formulating policy, and the states are responsible for implementation (Franzke, 2020). The Federal Government supports the states in dealing with extraordinary danger and the Federal Ministry of the Interior (BMI) supports the states' operations with technology, expertise and other services (Federal Ministry of Interior, Building and Community, 2020). Due to the decentralized system of government, the Federal Government does not have the power to impose pandemic emergency measures. In the beginning of the COVID-19 pandemic, in order to slowdown the spread of coronavirus, on 16 March 2020 the federal and state governments attempted to harmonize joint guidelines, however one month later State governments started to act more independently (Franzke & Kuhlmann, 2021). In Germany, health insurance is compulsory and more than 11% of Germany’s GDP goes into healthcare spending (Federal Statistical Office, 2021). Health related policy at the federal level is the primary responsibility of the Federal Ministry of Health. This ministry supervises institutions dealing with higher level of public health including the Federal Institute for Drugs and Medical Devices (BfArM), the Paul-Ehrlich-Institute (PEI), the Robert Koch Institute (RKI) and the Federal Centre for Health Education (Federal Ministry of Health, 2020). The first German National Pandemic Plan (NPP), published in 2005, comprises two parts. Part one, updated in 2017, provides a framework for the pandemic plans of the states and the implementation plans of the municipalities, and part two, updated in 2016, is the scientific part of the National Pandemic Plan (Robert Koch Institut, 2017). The joint Federal-State working group on pandemic planning was established in 2005. A pandemic plan for German citizens abroad was published by the German Foreign Office on its website in 2005 (Robert Koch Institut, 2017). In 2007, the federal and state Governments, under the joint leadership of the Federal Ministry of the Interior and the Federal Ministry of Health, simulated influenza pandemic exercise called LÜKEX 07, and trained cross-states and cross-department crisis management (Bundesanstalt Technisches Hilfswerk, 2007b). In 2017, within the context of the G20, Germany ran a health emergency simulation exercise with representatives from WHO and the World Bank to prepare for future pandemic events (Federal Ministry of Health et al., 2017). By the beginning of the COVID-19 pandemic, on 27 February 2020, a joint crisis team of the Federal Ministry of the Interior (BMI) and the Federal Ministry of Health (BMG) was established (Die Bundesregierung, 2020a). On 4 March 2020 RKI published a Supplement to the National Pandemic Plan for COVID-19 (Robert Koch Institut, 2020d), and on 28 March 2020, a law for the protection of the population in an epidemic situation of national scope (Infektionsschutzgesetz) came into force (Bundesgesundheitsministerium, 2020b). In the first early phase of the COVID-19 pandemic in 2020, Germany managed to slow down the speed of the outbreak but was less successful in dealing with the second phase. Coronavirus-related information and measures were communicated through various platforms including TV, radio, press conferences, federal and state government official homepages, social media and applications. In mid-March 2020, the federal and state governments implemented extensive measures nationwide for pandemic containment. Step by step, social distancing and shutdowns were enforced by all Federal States, involving closing schools, day-cares and kindergartens, pubs, restaurants, shops, prayer services, borders, and imposing a curfew. To support those affected financially by the pandemic, the German Government provided large economic packages (Bundesministerium der Finanzen, 2020). These measures have adopted to the COVID-19 situation and changed over the pandemic. On 22 April 2020, the clinical trial of the corona vaccine was approved by Paul Ehrlich Institute, and in late December 2020, the distribution of vaccination in Germany and all other EU countries

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.

Banco de la República provides a comprehensive overview of Colombia’s finan¬cial infrastructure in its Payment Systems Report, which is an important product of the work it does to oversee that infrastructure. The figures published in this edition of the report are for the year 2020, a pandemic period in which the con¬tainment measures designed and adopted to alleviate the strain on the health system led to a sharp reduction in economic activity and consumption in Colom¬bia, as was the case in most countries. At the start of the pandemic, the Board of Directors of Banco de la República adopted decisions that were necessary to supply the market with ample liquid¬ity in pesos and US dollars to guarantee market stability, protect the payment system and preserve the supply of credit. The pronounced growth in mone¬tary aggregates reflected an increased preference for liquidity, which Banco de la República addressed at the right time. These decisions were implemented through operations that were cleared and settled via the financial infrastructure. The second section of this report, following the introduction, offers an analysis of how the various financial infrastructures in Colombia have evolved and per¬formed. One of the highlights is the large-value payment system (CUD), which registered more momentum in 2020 than during the previous year, mainly be¬cause of an increase in average daily remunerated deposits made with Banco de la República by the General Directorate of Public Credit and the National Treasury (DGCPTN), as well as more activity in the sell/buy-back market with sovereign debt. Consequently, with more activity in the CUD, the Central Securi¬ties Depository (DCV) experienced an added impetus sparked by an increase in the money market for bonds and securities placed on the primary market by the national government. The value of operations cleared and settled through the Colombian Central Counterparty (CRCC) continues to grow, propelled largely by peso/dollar non-deliverable forward (NDF) contracts. With respect to the CRCC, it is important to note this clearing house has been in charge of managing risks and clearing and settling operations in the peso/dollar spot market since the end of last year, following its merger with the Foreign Exchange Clearing House of Colombia (CCDC). Since the final quarter of 2020, the CRCC has also been re¬sponsible for clearing and settlement in the equities market, which was former¬ly done by the Colombian Stock Exchange (BVC). The third section of this report provides an all-inclusive view of payments in the market for goods and services; namely, transactions carried out by members of the public and non-financial institutions. During the pandemic, inter- and intra-bank electronic funds transfers, which originate mostly with companies, increased in both the number and value of transactions with respect to 2019. However, debit and credit card payments, which are made largely by private citizens, declined compared to 2019. The incidence of payment by check contin¬ue to drop, exhibiting quite a pronounced downward trend during the past last year. To supplement to the information on electronic funds transfers, section three includes a segment (Box 4) characterizing the population with savings and checking accounts, based on data from a survey by Banco de la República con-cerning the perception of the use of payment instruments in 2019. There also is segment (Box 2) on the growth in transactions with a mobile wallet provided by a company specialized in electronic deposits and payments (Sedpe). It shows the number of users and the value of their transactions have increased since the wallet was introduced in late 2017, particularly during the pandemic. In addition, there is a diagnosis of the effects of the pandemic on the payment patterns of the population, based on data related to the use of cash in circu¬lation, payments with electronic instruments, and consumption and consumer confidence. The conclusion is that the collapse in the consumer confidence in¬dex and the drop in private consumption led to changes in the public’s pay¬ment patterns. Credit and debit card purchases were down, while payments for goods and services through electronic funds transfers increased. These findings, coupled with the considerable increase in cash in circulation, might indicate a possible precautionary cash hoarding by individuals and more use of cash as a payment instrument. There is also a segment (in Focus 3) on the major changes introduced in regulations on the retail-value payment system in Colombia, as provided for in Decree 1692 of December 2020. The fourth section of this report refers to the important innovations and tech¬nological changes that have occurred in the retail-value payment system. Four themes are highlighted in this respect. The first is a key point in building the financial infrastructure for instant payments. It involves of the design and im¬plementation of overlay schemes, a technological development that allows the various participants in the payment chain to communicate openly. The result is a high degree of interoperability among the different payment service providers. The second topic explores developments in the international debate on central bank digital currency (CBDC). The purpose is to understand how it could impact the retail-value payment system and the use of cash if it were to be issued. The third topic is related to new forms of payment initiation, such as QR codes, bio¬metrics or near field communication (NFC) technology. These seemingly small changes can have a major impact on the user’s experience with the retail-value payment system. The fourth theme is the growth in payments via mobile tele¬phone and the internet. The report ends in section five with a review of two papers on applied research done at Banco de la República in 2020. The first analyzes the extent of the CRCC’s capital, acknowledging the relevant role this infrastructure has acquired in pro¬viding clearing and settlement services for various financial markets in Colom¬bia. The capital requirements defined for central counterparties in some jurisdic¬tions are explored, and the risks to be hedged are identified from the standpoint of the service these type of institutions offer to the market and those associated with their corporate activity. The CRCC’s capital levels are analyzed in light of what has been observed in the European Union’s regulations, and the conclusion is that the CRCC has a scheme of security rings very similar to those applied internationally and the extent of its capital exceeds what is stipulated in Colombian regulations, being sufficient to hedge other risks. The second study presents an algorithm used to identify and quantify the liquidity sources that CUD’s participants use under normal conditions to meet their daily obligations in the local financial market. This algorithm can be used as a tool to monitor intraday liquidity. Leonardo Villar Gómez Governor