Press Release No. 10/366

Press Release: Statement of the IMF Mission at the Conclusion of its Visit to Côte d’Ivoire

September 29, 2010

An International Monetary Fund (IMF) mission, led by Ms. Doris Ross, traveled to Côte d’Ivoire from September 15–29. The mission met with the Minister of Economy and Finance, Charles Koffi Diby, and several other ministers, as well as ministry staff, senior officials of the BCEAO, the private sector, and donors. It also met with Prime Minister Guillaume Soro. Representatives from the World Bank and the African Development Bank participated in some of the discussions.

The mission reviewed the implementation of the authorities’ economic program and their poverty reduction strategy in the first half of 2010, which the IMF is supporting through its Extended Credit Facility (ECF). The mission updated the economic outlook for Côte d’Ivoire in light of recent economic developments. It held discussions with the authorities in relation to the third review of the program supported by the ECF, focusing on the implementation of economic policies during the second half of 2010 and the preparation of the reform program for 2011.

At the conclusion of the staff mission, Ms. Ross issued the following statement in Abidjan:

“Economic activity has held up well in 2010. Economic growth appears on track to reach the program target of 3 percent for the year despite sporadic power outages, difficulties in the oil and refinery sectors, and some civil unrest during the first half of 2010. Continued strong world cocoa prices, in particular, have helped support economic activity, and construction is having a significantly better year. Inflation has remained in the range of 2 percent. The external current account continues to shows a sizeable surplus, as both exports and imports are growing robustly.

“With respect to the economic program in 2010, the budget outcome at end-June was generally in line with program commitments. Revenue performance accounted for much of a better-than-programmed overall budget deficit (0.5 percent of GDP), but this is not expected to affect the outlook for the year as a whole. Public expenditure remained within the planned envelope, with foreign-funded investment being executed especially well, though the target for pro-poor spending was missed by a narrow margin.

“Structural reform implementation was slow and appears to have stalled in critical areas: reducing the large financial imbalances in the electricity sector, establishing medium-term sustainability of the government wage bill and reforming the civil service, and judicial reforms needed to improve the poor business environment. These delays impose costs on the budget. Also, the implementation of cocoa and coffee sector reforms is important for the floating completion point under the HIPC Initiative.

“The mission welcomed the authorities’ reaffirmation of their main economic policy objectives: facilitating higher economic growth and reducing the widespread poverty in Côte d’Ivoire. In line with the country’s poverty reduction strategy, budget expenditure will continue to shift towards pro-poor spending, including basic health care and education. But with an investment rate of less than 10 percent of GDP, the country urgently needs substantial new investment in the coming years, especially in power and transport infrastructure. Thus it will be important that the authorities develop a comprehensive borrowing strategy, one that takes into account debt sustainability issues and the long-run fiscal path in setting borrowing objectives.

“Discussions for the third review of the ECF-supported program have made significant progress. Nevertheless, the authorities need more time to advance the program’s structural reform agenda and to develop their reform program for next year. It will be important that the upcoming government endorse the understandings on policies for 2011. The mission stands ready to return to complete discussions in the coming months.

“The mission thanks the Ivorian authorities for their warm welcome and for the constructive discussions.”