Press Release No. 08/216

Press Release: IMF Executive Board Completes First Review Under Togo's PRGF Arrangement, and Approves Increase in Financial Support by US$29 million

September 22, 2008

The Executive Board of the International Monetary Fund (IMF) today completed the first review of Togo's performance under its Poverty Reduction and Growth Facility (PRGF) arrangement. The Executive Board also approved an increase in financial support under the program by SDR 18.35 million (about US$29 million) to SDR 84.41 million (about US$132 million) to help Togo cope with global price shocks and the impact of the recent flooding.

Today's decisions allow for an immediate disbursement to Togo of an amount equivalent to SDR 17.975 million (about US$28 million).

Togo's PRGF arrangement was originally approved in April 2008 (see Press Release No. 08/90).

Following the Executive Board discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chairman, said:

"The Togolese authorities are to be commended for their exemplary performance under the PRGF-supported program. All performance criteria were met, some by wide margins, reflecting improved revenue performance and fiscal discipline. Key structural reforms have moved ahead, especially in the area of public financial management.

"Togo is among the economies most adversely affected by the global food and fuel price shocks. This situation has been exacerbated by recent heavy flooding in the country, which has destroyed vital transport infrastructure. The authorities' policy response to these setbacks has rightly focused on social impact mitigation and support of agriculture. The augmentation of access to PRGF resources will support the authorities' own efforts to deal with these shocks.

"The authorities' draft 2009 budget is an important step toward a sustainable fiscal position, and sets the stage for an economic recovery. It aims to restore a balanced primary position, boost spending on health, education, and infrastructure rehabilitation, and implement the domestic arrears clearance strategy. Togo's structural reform agenda for the remainder of 2008 and 2009 is focused appropriately on consolidating fiscal governance reforms and advancing the reform of state-owned banks and enterprises.

"A significant increase in concessional project support will be necessary to achieve the investment and social objectives of the program. Technical assistance will be particularly important in this context, given Togo's weak institutional capacity.

"Togo has made major strides in regularizing relations with external creditors, including the recent Paris Club rescheduling and arrears clearance operations with the World Bank and African Development Bank. Togo is eligible for assistance under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative and is expected to reach the decision point later this year,"Mr. Portugal said.

The PRGF is the IMF's concessional facility for low-income countries. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5½-year grace period on principal payments.